In an informal dispute resolution involving Stretch Zone, who is responsible for covering their own costs?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Informal Dispute Resolution and Mediation Costs. Each party will bear its, his or her own costs in engaging in informal dispute resolution. Each party will bear its, his or her own costs in any mediation except the filing fee and the fees to the mediator will be shared equally by the parties.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, during informal dispute resolution, each party is responsible for covering their own costs. This means that whether it's Stretch Zone or the franchisee initiating or participating in the informal resolution process, they will individually bear the expenses they incur.
This arrangement is fairly standard in franchise agreements, as it encourages parties to attempt to resolve disputes efficiently and without escalating costs early on. It ensures that neither party is deterred from seeking resolution due to the fear of shouldering the other party's expenses. This approach promotes good-faith negotiations and can lead to quicker, more amicable resolutions.
However, it's important to note that this cost allocation applies specifically to informal dispute resolution. If the dispute escalates to mediation or arbitration, different cost-sharing arrangements may apply, as outlined elsewhere in the Franchise Agreement. Franchisees should be aware of these distinctions and understand the financial implications at each stage of the dispute resolution process.