Under whose auspices will mediation occur for Spray Net disputes?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, if mediation is required to resolve disputes between the franchisee and franchisor, it will occur under the auspices of the American Arbitration Association (AAA). The mediation will take place in New Castle County, Delaware, and will be conducted in accordance with the AAA's Commercial Mediation Rules in effect at that time. This means that the AAA will provide the framework and guidelines for the mediation process.
Spray Net has the option to require mediation for disputes that arise from the franchise agreement or any other agreements between the franchisee and Spray Net. Before starting any legal action against Spray Net, the franchisee must first notify Spray Net of the dispute. Spray Net then has 30 days to decide whether to use mediation. The franchisee cannot start a lawsuit unless Spray Net does not choose mediation or the mediation ends without a resolution, indicated by a written declaration from the mediator or Spray Net.
Both parties will be responsible for their own mediation costs, but they will equally share the fees of the mediator. This agreement to mediate survives the termination or expiration of the franchise agreement. However, mediation is not required for certain claims, such as those involving intellectual property rights, restrictive covenants, or the franchisee's payment obligations. This means Spray Net can immediately pursue legal action in those specific cases without going through mediation first.
This mediation process is a common practice in franchising, intended to provide a less costly and more efficient way to resolve disputes compared to litigation. Franchisees should be aware of these dispute resolution steps and understand the circumstances under which mediation is required or can be bypassed in favor of direct legal action.