factual

Must a Kidokinetics franchisee exhaust the internal dispute resolution procedure before bringing a dispute before a third party?

Kidokinetics Franchise · 2024 FDD

Answer 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, a franchisee is required to first attempt to resolve any disputes internally with the Franchisor's President before pursuing resolution with a third party. This initial step is mandatory, meaning a franchisee cannot immediately take legal action or seek external mediation without first engaging in the internal dispute resolution process. This requirement remains in effect even after the termination or expiration of the Franchise Agreement.

Following the internal dispute resolution, Kidokinetics has the option to require mediation. If Kidokinetics chooses mediation, it will occur in Davie, Florida, or the Greater Miami Area, under the American Arbitration Association (AAA) Commercial Mediation Rules. Before starting any legal action, the franchisee must provide detailed written notice to Kidokinetics, outlining the claim or dispute. Kidokinetics then has 30 days to decide whether to submit the dispute to mediation.

The franchisee cannot initiate a lawsuit against Kidokinetics unless Kidokinetics declines mediation or the mediation is terminated, either by the mediator's declaration that further efforts are unproductive or by Kidokinetics's written declaration. Each party is responsible for their own mediation costs, while mediation costs are shared equally between the franchisee and Kidokinetics. These mediation terms survive the termination or expiration of the Franchise Agreement, and class action mediations are not permitted.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.