What dispute resolution procedures must Mrcool franchisees follow before pursuing legal action?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
| r. | Non-competition covenants after the franchise is terminated or expires | 6, 17.E. | No involvement, ownership or interest whatsoever for 24 months in any competing business in: your Designated Territory; a 25-mile radius of your Designated Territory; a 10-mile radius of the Designated Territory of any other Center; and you must comply with confidentiality, non disclosure and non-solicitation covenants. |
|---|---|---|---|
| s. | Modification of the agreement | 18.L. | Requires writing signed by you and us, except for unilateral changes that we may make to the Manuals or our unilateral reduction of the scope of a restrictive covenant that we may make in our discretion. |
| t. | Integration/merger clauses | 18.M. | Only the terms of the Franchise Agreement and schedules to the Franchise Agreement and the respective signed exhibits to the Franchise Agreement are binding, subject to state law. Nothing in any agreement is intended to disclaim the express representations made in the Franchise Disclosure Document, its exhibits and amendments. |
| u. | Dispute resolution by arbitration or mediation | 18.G. | Except for certain claims for injunctive relief, all disputes must first be submitted to non-binding mediation in Graves County, Kentucky and, if mediation is unsuccessful, then to binding arbitration in Graves County, Kentucky. This provision is subject to applicable state law. |
| v. | Choice of forum | 18.G. | All mediation, arbitration and, if applicable, litigation proceedings must be conducted in, or closest to, State court of general jurisdiction that is within or closest to Graves County, Kentucky. This provision is subject to applicable state law. |
| w. | Choice of law | 18.F. | Kentucky law will govern. However, this provision is subject to state law and as otherwise disclosed in Exhibit I to this Disclosure Document. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–50)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, franchisees must first engage in non-binding mediation before pursuing legal action, with the exception of certain claims for injunctive relief. This mediation is required to take place in Graves County, Kentucky. If the mediation is not successful in resolving the dispute, the franchisee must then submit to binding arbitration, also in Graves County, Kentucky. These dispute resolution steps are subject to applicable state law, which may introduce variations or exceptions based on the franchisee's location.
This requirement for mediation and arbitration before litigation is a fairly common practice in franchising. It is designed to save both Mrcool and its franchisees time and money by resolving disputes outside of the court system. Mediation involves a neutral third party who helps facilitate a settlement, while arbitration involves a neutral third party who makes a binding decision.
The FDD specifies that all mediation, arbitration, and litigation proceedings must be conducted in or closest to the State court of general jurisdiction within or closest to Graves County, Kentucky. Furthermore, Kentucky law governs the franchise agreement, although this is subject to state law and any disclosures in Exhibit I of the FDD. This means that while Kentucky law generally applies, the franchisee's local state laws may override certain provisions or offer additional protections.
Prospective franchisees should be aware of these dispute resolution procedures and understand that they will likely be required to participate in mediation and arbitration before pursuing a lawsuit against Mrcool. Franchisees should also consult with an attorney to understand how state laws may affect these procedures and their rights.