Under what circumstances will disputes between a Spray Net franchisee and franchisor be submitted to mediation?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
iples.
- B. Internal Dispute Resolution. Franchisee must first bring any claim or dispute between Franchisee and Franchisor to Franchisor's management, after providing notice as set forth in Section 21(G) of this Agreement, and make every effort to resolve the dispute internally. Franchisee must exhaust this internal dispute resolution procedure before Franchisee may bring Franchisee's dispute before a third party. This agreement to first attempt resolution of disputes internally shall survive termination or expiration of this Agreement.
- C. Mediation. At Franchisor's option, all claims or disputes between Franchisee and Franchisor (or its affiliates) arising out of, or in any way relating to, this Agreement or any other agreement by and between Franchisee and Franchisor (or its affiliates), or any of the parties' respective rights and obligations arising from such agreement, which are not first resolved through the internal dispute resolution procedure sent forth in Section 21(B) above, will be submitted first to mediation to take place in the County of New Castle, Delaware, under the auspices of the American Arbitration Association ("AAA"), in accordance with AAA's Commercial Mediation Rules then in effect. Before commencing any legal action against Franchisor or its affiliates with respect to any such claim or dispute, Franchisee must submit a notice to Franchisor, which specifies, in detail, the precise nature and grounds of such claim or dispute. Franchisor will have a period of thirty (30) days following receipt of such notice within which to notify Franchisee as to whether Franchisor or its affiliates elects to exercise its option to submit such claim or dispute to mediation. Franchisee may not commence any action against Franchisor or its affiliates with respect to any such claim or dispute in any court unless Franchisor fails to exercise its option to submit such claim or dispute to mediation, or such mediation proceedings have been terminated either: (i) as the result of a written declaration of the mediator(s) that further mediation efforts are not worthwhile; or (ii) as a result of a written declaration by Franchisor. Franchisor's rights to mediation, as set forth herein, may be specifically enforced by Franchisor. Each party will bear its own cost of mediation and Franchisor and Franchisee will share mediator fees equally. This agreement to mediate will survive any termination or expiration of this Agreement. The parties will not be required to first attempt to mediate a controversy, dispute, or claim through mediation as set forth in this Section 21(C) if such controversy, dispute, or claim concerns an allegation that a party has violated (or threatens to violate, or poses an imminent risk of violating): (i) any federally protected intellectual property rights in the Proprietary Marks, the System, or in any Confidential Information or other confidential information; (ii) any of the restrictive covenants contained in this Agreement; and (iii) any of Franchisee's payment obligations under this Agreement.
- D. Injunctive Relief.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, disputes between a franchisee and Spray Net will be submitted to mediation at Spray Net's option. However, before mediation, the franchisee must first bring the dispute to Spray Net's management and make an effort to resolve it internally. If internal resolution fails, Spray Net can then elect to submit the dispute to mediation. The mediation will take place in New Castle County, Delaware, under the rules of the American Arbitration Association.
Before starting any legal action against Spray Net, a franchisee must provide a detailed notice specifying the nature and grounds of the claim. Spray Net then has 30 days to decide whether to submit the dispute to mediation. The franchisee cannot start any legal action unless Spray Net declines mediation or the mediation is terminated, either by the mediator or by Spray Net. Spray Net retains the right to enforce its mediation rights.
However, mediation is not required in certain cases. These include claims involving a franchisee's past due payment obligations, the actual or threatened disclosure or misuse of Spray Net's confidential information, or the actual or threatened violation of Spray Net's rights in its Proprietary Marks or System. Additionally, disputes regarding restrictive covenants in the Franchise Agreement, or claims related to fraud, misrepresentation, or franchisee insolvency are also excluded from mandatory mediation.
Each party bears its own mediation costs, but the fees of the mediator are shared equally between Spray Net and the franchisee. The agreement to mediate survives any termination or expiration of the Franchise Agreement. If mediation is unsuccessful, any legal action must be initiated in a court of competent jurisdiction located in New Castle County, Delaware, or the United States District Court for the District of Delaware.