any dispute, controversy or claim between and among the parties and any of our or your affiliates, officers, directors, shareholders, members, guarantors, employees or owners arising under, out of, in connection with or in relation to this Agreement, any lease or sublease for your Business, any loan or other finance arrangement between us or our affiliates and you, the parties’ relationship, your Business, or any System Standard in accordance with the following procedures:

This section explains how mediation must be initiated. For example, the party seeking mediation of a dispute must provide a written notice of its request headed“ Notification of Dispute.” The Notification of Dispute must identify: the facts surrounding the dispute; the amount of damages, if any; and the nature of any other relief, as applicable. Except for disputes relating to Termination( Section 15), the responding party must respond to the Notification of Dispute within 20 days. The mediation provision has a built-in, informal“ good faith” obligation on the parties to attempt to resolve the dispute short of hiring a thirdparty mediator. If, after 20 days, that cannot be achieved, the parties, unless otherwise agreed to, will submit their dispute to the American Arbitration Association( AAA) for administration of the mediation. The AAA is an independent organization that assists in the administration of mediation and arbitration matters both in the United States and internationally. The AAA has specific rules and fees governing mediations.

In short, the process is a simple one. The parties work to mutually agree on a third-party neutral, called a mediator, who will assist the parties in trying to resolve their dispute. If the parties

cannot agree on a mediator, the AAA will propose several options from their expansive list of qualified mediators from which the parties must, according to the franchise agreement,“ jointly select.” This is often done through a rank and strike process. Once a mediator is selected, there is typically a preliminary conference( by phone) to discuss the particulars of the matter, and then a mediation session, which all parties must attend( in person, usually), is scheduled. Mediation, to be successful, will require not only good faith participation, but will also require commitment by the parties to compromise.

Avoiding conflicts is critical to the success of any franchise operation. Indeed, it can be a major distraction to not only the franchisee’ s business but also to the franchisor’ s as well as the overall operations of a franchise system. Unfortunately, many times it is unavoidable. As such, it is important to be aware of the process to resolve these conflicts while incurring as little interruption or interference as possible. Open dialogue and communication is paramount to ensure this result. However, when all else fails, it is not only imperative to know and follow the proper procedure to mediation but doing so may very well lead to a successful resolution and avoidance of what could be debilitating litigation or arbitration. G

Justin M. Klein is a franchise and business attorney and a partner with the nationally recognized franchise law firm of Marks & Klein, LLP, which represents Planet Fitness franchise operators throughout the United States. You can contact him at justin @ marksklein. com.