Does the Mrcool franchise agreement include provisions for non-binding mediation and binding arbitration?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
18.G. NON-BINDING MEDIATION AND BINDING ARBITRATION
(1) Non-Binding Mediation – Franchisee and Franchisor agree that before either party may bring any action, dispute and/or controversy arising from or related to this Agreement and/or the franchise relationship between Franchisor and Franchisee in arbitration, the parties must first mediate the dispute through non-binding mediation. Mediation shall be non-binding and shall be conducted by the American Arbitration Association ("AAA") in accordance with the AAA's then current rules for the mediation of commercial disputes. All mediation proceedings shall be conducted in Graves County, Kentucky or, if a mediator is not available in Graves County, Kentucky then at a suitable location selected by the mediator that is located closest to Graves County, Kentucky. Mediation shall be conducted by one mediator and if Franchisor and Franchisee cannot agree on a mediator then the mediator shall be selected by the AAA. Mediation shall be conducted within 45 days of the AAA's designation and/or acknowledgment of the selected mediator or such longer period as may be agreed to between Franchisor and Franchisee in writing and signed by each respective party. Franchisor and Franchisee shall each be responsible for their own costs associated with mediation and Franchisor and Franchisee shall each be responsible for and shall each pay 50% of the mediator's fee and the AAA's mediation fees.
Notwithstanding the preceding paragraph, Franchisor and Franchisee agree this Sub-Article 18.G.(1) and, thereby, the prerequisite requirement of non-binding mediation, shall not, at Franchisor's election, apply to: (a) any claims or disputes related to or concerning a breach of this Agreement by Franchisee that, under the terms of this Agreement, may entitle Franchisor to the award of injunctive relief including, but not limited to, Franchisee's violation or purported violation
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to the 2025 Mrcool Franchise Disclosure Document, the franchise agreement mandates non-binding mediation before either party can initiate arbitration for disputes related to the agreement or the franchise relationship. This mediation is to be conducted through the American Arbitration Association (AAA) following their commercial dispute mediation rules. Unless otherwise agreed, the mediation will take place in Graves County, Kentucky, or a location nearby selected by the mediator. If Mrcool and the franchisee cannot agree on a mediator, the AAA will select one. The mediation must occur within 45 days of the mediator's designation, though this can be extended by written agreement.
Both Mrcool and the franchisee are responsible for their own mediation costs and will each cover 50% of the mediator's and the AAA's fees. However, Mrcool has the option to waive the non-binding mediation requirement for claims related to a breach of the agreement by the franchisee that could entitle Mrcool to injunctive relief, such as violations of the agreement's terms.
Furthermore, the Illinois and Washington state addenda to the Mrcool franchise agreement address governing law, mediation, and arbitration. For instance, Illinois law governs the agreements, but the franchise agreement may provide for arbitration outside of Illinois. In Washington, the arbitration or mediation site must be in Washington or a mutually agreed-upon location. These stipulations ensure that franchisees' rights are considered in the context of dispute resolution, and that Mrcool adheres to specific state laws regarding franchise agreements.