What prerequisite requirement must be met before initiating arbitration for Mrcool disputes?
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 Mrcool's 2025 Franchise Disclosure Document, before either party can initiate arbitration for any dispute arising from the franchise agreement or relationship, they must first attempt to resolve the issue through non-binding mediation. This mediation is to be conducted by the American Arbitration Association (AAA) following their rules for commercial disputes. The mediation will take place in Graves County, Kentucky, or the closest available location if a mediator is unavailable in that county. A single mediator will preside, selected either by mutual agreement between Mrcool and the franchisee or by the AAA if they cannot agree. The mediation must occur within 45 days of the mediator's designation, unless both parties agree to a longer period in writing.
Both Mrcool and the franchisee are responsible for their own costs associated with the mediation. They will each pay 50% of the mediator's fee and the AAA's mediation fees. This requirement for non-binding mediation serves as a preliminary step, encouraging both parties to attempt to resolve their issues amicably before resorting to binding arbitration.
However, Mrcool has the option to bypass this mediation requirement in specific situations. If the dispute involves a breach of the agreement by the franchisee that could entitle Mrcool to injunctive relief, Mrcool can choose to proceed directly to arbitration without prior mediation. This exception provides Mrcool with a faster route to resolution in cases where immediate action is necessary to protect its interests.