Who is responsible for the costs associated with Mrcool franchise mediation?
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, both the franchisee and Mrcool share the costs associated with mediation. Specifically, Mrcool and the franchisee are each responsible for their own costs and will each pay 50% of the mediator's fee and the American Arbitration Association's (AAA) mediation fees. This applies when mediating disputes related to the franchise agreement before initiating arbitration.
This arrangement means that a franchisee will need to budget for these mediation expenses should a dispute arise. By splitting the costs, Mrcool shares the financial burden of attempting to resolve conflicts through mediation, which is a common practice in franchising to encourage alternative dispute resolution before resorting to potentially expensive and time-consuming arbitration or litigation.
It is important to note that this cost-sharing arrangement is tied to non-binding mediation conducted through the AAA. The FDD specifies that mediation proceedings will occur in Graves County, Kentucky, or a location closest to it selected by the mediator if one is not available in Graves County. Franchisees should consider these location requirements when evaluating the potential costs and logistics of mediation. Also, Mrcool has the option to not require mediation for claims related to a breach of the agreement by the franchisee that may entitle Mrcool to injunctive relief.