What is the effect of the internal dispute resolution agreement on the Kidokinetics franchise after termination or expiration?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 19.1. Internal Dispute Resolution. Franchisee must first bring any claim or dispute between Franchisee and Franchisor to Franchisor's President. Franchisee must exhaust this internal dispute resolution procedure before Franchisee may bring Franchisee's dispute before a third party. This agreement to first attempt resolution of disputes internally will survive termination or expiration of this Agreement.
- 19.2. Mediation. At Franchisor's option, all claims or disputes between Franchisee and Franchisor or its affiliates arising out of, or in any way relating to, this Agreement or any other agreement by and between Franchisee and Franchisor or its affiliates, or any of the parties' respective rights and obligations arising from such agreements, which are not first resolved through the internal dispute resolution procedure set forth in Section 19.1 above, must be submitted first to non-binding mediation, in Davie, Florida or the Greater Miami Area under the auspices of the American Arbitration Association ("AAA"), in accordance with AAA's Commercial Mediation Rules then in effect. Before commencing any legal action against Franchisor or its affiliates with respect to any such claim or dispute, Franchisee must submit a notice to Franchisor, which specifies, in detail, the precise nature and grounds of such claim or dispute. Franchisor will have a period of 30 days following receipt of such notice within which to notify Franchisee whether Franchisor or its affiliates elects to exercise its option to submit such claim or dispute to mediation. Franchisee may not commence any action against Franchisor or its affiliates with respect to any such claim or dispute in any court unless Franchisor fails to exercise its option to submit such claim or dispute to mediation, or such mediation proceedings have been terminated either: (i) as the result of a written declaration of the mediator(s) that further mediation efforts are not worthwhile; or (ii) as a result of a written declaration by Franchisor. Franchisor's rights to mediation, as set forth herein, may be specifically enforced by Franchisor. Each party will bear its own cost of mediation and Franchisee and Franchisor will share mediation costs equally. This agreement to mediate will survive any termination or expiration of this Agreement. The parties agree that there will be no class action mediation. The parties will not be required to first attempt to mediate a controversy, dispute, or claim through mediation as set forth in this
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the agreement to first attempt internal resolution of disputes with Kidokinetics will remain in effect even after the franchise agreement is terminated or expires. This means that if a franchisee has any claims or disputes with Kidokinetics, they must first bring it to the attention of Kidokinetics's President for resolution, before pursuing any third-party options.
This requirement to exhaust internal dispute resolution before seeking external remedies is a notable obligation for franchisees. It potentially adds a step to the dispute resolution process, requiring the franchisee to engage with Kidokinetics directly before pursuing mediation or legal action. While this could potentially lead to quicker and more cost-effective resolutions in some cases, it also means the franchisee must invest time and effort into this internal process.
Furthermore, at Kidokinetics's option, all claims or disputes between the franchisee and Kidokinetics must be submitted first to non-binding mediation, in Davie, Florida or the Greater Miami Area under the auspices of the American Arbitration Association. Before commencing any legal action against Kidokinetics, the franchisee must submit a notice to Kidokinetics, which specifies, in detail, the precise nature and grounds of such claim or dispute. This agreement to mediate will survive any termination or expiration of the Franchise Agreement.