A judge in the federal Northern District Court in California has ruled that Golden Valley–based franchisor Dry Cleaning Station can require its franchisees to work toward a mediated resolution of disputes with the company before turning to litigation.
Earlier this summer, the court dismissed a case brought against the company by a Dry Cleaning Station franchisee because he had violated a “compulsory mediation clause” in his contract. Minneapolis law firm Larkin Hoffman Daly & Lindgren inserted the clause in franchisee contracts on behalf of its client Dry Cleaning Station. The law firm says, “Studies show that a vast majority of all business disputes submitted to mediation are settled without the need for protracted”—and costly—“adversarial proceedings,” but that it’s often difficult to get the parties to the table.
The compulsory mediation clause used by Larkin Hoffman’s franchise group calls for the court to dismiss any litigation that is commenced without completing at least four hours of mediation, and to require the litigant to pay all attorneys’ fees that result.
