If mediation fails, are Southern Steer franchisees required to submit to binding arbitration?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
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 22.4) 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 FRANCHISEE 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.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, if direct mediation does not fully resolve a dispute within 30 days after the mediation conference concludes, all unresolved issues will be submitted to binding arbitration if either party demands it. This means that franchisees are obligated to participate in binding arbitration if mediation fails and the franchisor chooses to pursue this route.
The arbitration will be conducted before a single neutral arbitrator who has contract experience. The arbitrator is appointed by the Forum and will follow the Forum's code of procedure. The arbitrator must apply the express provisions of the franchise agreement and applicable law, and cannot extend, modify, or suspend any terms of the agreement or the franchisor's business standards.
Both Southern Steer and the franchisee must submit any claim that would constitute a compulsory counterclaim within the same proceeding, or the claim will be barred. Each party must provide the other with copies of relevant documents upon written request. The arbitrator will determine any disputes regarding discovery, and all discovery must be completed within 60 days following the arbitrator's appointment.
This mandatory arbitration clause means franchisees give up their right to sue Southern Steer in court, accepting instead a private dispute resolution process where the arbitrator's decision is final and binding, with limited grounds for appeal. Franchisees should carefully consider the implications of this clause, including the cost of arbitration and the limitations it places on their legal rights.