Does the Southern Steer franchise agreement require mediation or arbitration for disputes concerning obligations upon termination or expiration of the agreement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
EDIATION, INCLUDING THE MEDIATOR'S FEE AND EXPENSES, SHALL BE SPLIT EQUALLY BETWEEN FRANCHISOR AND MULTI-UNIT DEVELOPER AND/OR THE CONTROLLED ENTITY (IF ANY). (c) Arbitration. IF THE PARTIES CANNOT FULLY RESOLVE AND SETTLE A DISPUTE THROUGH DIRECT MEDIATION WITHIN 30 DAYS AFTER THE MEDIATION CONFERENCE CONCLUDES, ALL UNRESOLVED ISSUES INVOLVED IN THE DISPUTE (SUBJECT TO SECTION 14.4) WILL BE SUBMITTED TO BINDING ARBITRATION TO THE FORUM ON DEMAND OF EITHER PARTY. BUT A NOTICE OR REQUEST FOR ARBITRATION WILL NOT OPERATE TO STAY, POSTPONE, OR RESCIND THE EFFECTIVENESS OF ANY DEMAND FOR PERFORMANCE OR NOTICE OF TERMINATION. THE ARBITRATION PROCEEDING WILL BE BEFORE ONE NEUTRAL ARBITRATOR WITH CONTRACT EXPERIENCE APPOINTED BY THE FORUM IN ACCORDANCE WITH THE THEN-CURRENT OR SUCCESSOR CODE OF PROCEDURE. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE ARBITRATION SHALL BE CONDUCTED IN ACCORDANCE WITH THE THEN CURRENT OR SUCCESSOR CODE OF PROCEDURE. THE ARBITRATOR WILL AGREE TO FOLLOW AND APPLY THE EXPRESS PROVISIONS OF THIS AGREEMENT IN DETERMINING THE ARBITRATION AWARD. THE ARBITRATOR WILL NOT EXTEND OR MODIFY OR SUSPEND ANY OF THE TERMS OF THE AGREEMENT OR THE REASONABLE STANDARDS OF BUSINESS PERFORMANCE AND OPERATION ESTABLISHED BY FRANCHISOR. THE ARBITRATOR SHALL BE BOUND TO APPLY THE APPLICABLE LAW AND SHALL NOT RULE INCONSISTENTLY WITH APPLICABLE LAW. FRANCHISOR AND MULTI-UNIT DEVELOPER AND CONTROLLED ENTITY (IF ANY) AGREE THAT, IN ANY ARBITRATION PROCEEDING, EACH PARTY MUST SUBMIT OR FILE ANY CLAIM WHICH WOULD CONSTITUTE A COMPULSORY COUNTERCLAIM (AS DEFINED BY THE FEDERAL RULES OF CIVIL PROCEDURE) WITHIN THE SAME PROCEEDING AS THE CLAIM TO WHICH IT RELATES. ANY CLAIM WHICH IS NOT SUBMITTED OR FILED AS REQUIRED IS FOREVER BARRED. EACH PARTY WILL, UPON THE WRITTEN REQUEST OF THE OTHER PARTY, PROMPTLY PROVIDE THE OTHER WITH COPIES OF DOCUMENTS RELEVANT TO THE ISSUES RAISED BY ANY CLAIM OR COUNTERCLAIM ON WHICH THE PRODUCING PARTY MAY RELY IN SUPPORT OF OR IN OPPOSITION TO ANY CLAIM OR DEFENSE. ANY DISPUTE REGARDING DISCOVERY, OR THE RELEVANCE OR SCOPE THEREOF, SHALL BE DETERMINED BY THE ARBITRATOR, WHICH DETERMINATION SHALL BE CONCLUSIVE. ALL DISCOVERY SHALL BE COMPLETED WITHIN 60 DAYS FOLLOWING THE APPOINTMENT OF THE ARBITRATOR. AT THE REQUEST OF A PARTY, THE ARBITRATOR SHALL HAVE THE DISCRETION TO ORDER EXAMINATION BY DEPOSITION OF WITNESSES TO THE EXTENT THE ARBITRATOR DEEMS SUCH ADDITIONAL DISCOVERY RELEVANT AND APPROPRIATE. DEPOSITIONS SHALL BE LIMITED TO A MAXIMUM OF FIVE PER PARTY AND SHALL BE HELD WITHIN 30 DAYS OF MAKING OF A REQUEST. ADDITIONAL DEPOSITIONS MAY BE SCHEDULED ONLY WITH THE PERMISSION OF THE ARBITRATOR AND FOR GOOD CAUSE SHOWN. EACH DEPOSITION SHALL BE LIMITED TO A MAXIMUM OF SIX HOURS DURATION. ALL OBJECTIONS ARE RESERVED FOR THE ARBITRATION HEARING EXCEPT FOR OBJECTIONS BASED ON PRIVILEGE AND PROPRIETARY OR CONFIDENTIAL INFORMATION. FRANCHISOR AND MULTI-UNIT DEVELOPER AND CONTROLLED ENTITY (IF ANY) AGREE THAT THE ARBITRATION SHALL BE CONDUCTED ON AN INDIVIDUAL, NOT A CLASS-WIDE BASIS AND THAT ANY ARBITRATION PROCEEDING BETWEEN FRANCHISOR AND MULTI-UNIT DEVELOPER AND CONTROLLED ENTITY (IF ANY) SHALL NOT BE COMMENCED, CONSOLIDATED OR CONDUCTED WITH ANY OTHER ARBITRATION PROCEEDING. THE ARBITRATOR HAS NO AUTHORITY TO RULE ON THE ENFORCEABILITY OF THE BAN ON CLASS-ACTION ARBITRATION. ANY RULING BY THE ARBITRATOR AUTHORIZING ARBITRATION TO BE CONDUCTED ON A CLASS-WIDE BASIS IS SUBJECT TO APPEAL TO A COURT OF COMPETENT JURISDICTION. THE ARBITRATOR WILL NOT HAVE THE AUTHORITY TO DECLARE ANY TRADEMARK GENERIC, DESCRIPTIVE OR OTHERWISE INVALID. THE ARBITRATOR MAY NOT CONSIDER ANY SETTLEMENT DISCUSSIONS OR OFFERS THAT MIGHT HAVE BEEN MADE BY MULTI-UNIT DEVELOPER AND CONTROLLED ENTITY (IF ANY) OR FRANCHISOR. THE AWARD SHALL BE MADE WITHIN NINE MONTHS OF THE FILING OF THE NOTICE OF INTENTION TO ARBITRATE, AND THE ARBITRATOR SHALL AGREE TO COMPLY WITH THIS SCHEDULE BEFORE ACCEPTING APPOINTMENT. THIS TIME LIMIT MAY BE EXTENDED BY THE PARTIES OR ARBITRATOR IF NECESSARY.
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, disputes between Southern Steer and the multi-unit developer must first go through direct mediation. If mediation does not fully resolve the dispute within 30 days after the mediation conference concludes, the unresolved issues will be submitted to binding arbitration if either party demands it. This applies to any disputes, controversies, or claims arising out of or related to the Multi-Unit Developer Agreement or any other agreement between the parties relating to the Southern Steer business.
This requirement extends to obligations upon termination or expiration of the agreement, as the definition of "Dispute" is broad and includes any disputes related to the agreement or the relationship between the parties. The arbitration will be conducted before one neutral arbitrator with contract experience appointed by the Forum, following the Forum's code of procedure. The arbitrator is obligated to apply the express provisions of the agreement and applicable law, and cannot extend, modify, or suspend any terms of the agreement.
Both mediation and arbitration are common methods of dispute resolution in franchising. Mediation offers a chance for the parties to reach a mutually agreeable solution with the help of a neutral third party, while arbitration provides a more formal process with a binding decision made by an arbitrator. The Southern Steer agreement specifies that the cost of mediation, including the mediator's fees and expenses, will be split equally between Southern Steer and the multi-unit developer. A prospective franchisee should understand these procedures and costs associated with resolving potential disputes through mediation and arbitration.