There is no set way franchise disputes must be settled. Sure, there are some state laws that require the laws where the franchise business is located to prevails and the alike. But, there is no per se way that franchise disputes must be resolved. The franchisor in drafting the agreement can require mediation, arbitration, litigation and any combination thereof.
However, once decided, the language in the franchise will dictate [except for the state law limitations]; therefore, it behooves one to read and re-read to ensure proper steps are followed. Failing to do so, will result in one spinning his/her wheels.
Hence is the case of World of Beer Franchising, Inc. v. MWB Development I, LLC, et al. Under the franchise agreement entered into between the parties’ disputes were to be resolved via non-binding mediation and arbitration, except in disrupts regarding the trademark and in which case a junction through the court may be sought so long as a petition for non-binding mediation was petitioned contemporaneously.
NOTHING IN THIS AGREEMENT WILL PREVENT YOU OR WE FROM OBTAINING TEMPORARY RESTRAINING ORDERS AND TEMPORARY OR PRELIMINARY INJUNCTIVE RELIEF FROM A COURT OF COMPETENT JURISDICTION. HOWEVER, YOU AND WE MUST CONTEMPORANEOUSLY SUBMIT A DISPUTE FOR ARBITRATION ON THE MERITS.
A dispute regarding the trademark and other issues ensued. Franchisee was buying services and products from unapproved suppliers. The franchisor and franchisee agreed to a mutual termination, but franchisee continued business under the trademark after the mutual termination of the franchise agreement.
The franchisor filed a petition for an injunction in court. The court denied the injunction on the basis that no petition for non-binding mediation was filed. This case is a reminder that once in writing alternative dispute resolution [mediation and arbitration clauses], even post the termination of the franchise agreement, shall be enforced to the fullest extent permitted by law.