Who bears the costs of arbitration according to the Aerus franchise agreement?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
The fees of the arbitration initially shall be paid one-half by Company and one-half by Franchisee; provided, however, that the prevailing party in any such arbitration shall be entitled to recover its reasonable attorneys' fees, costs and expenses (and any interest) incurred in connection with the arbitration.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the fees for arbitration are initially split, with half being paid by Aerus and the other half by the franchisee. However, the prevailing party in the arbitration is entitled to recover their reasonable attorneys' fees, costs, and expenses, including any interest incurred during the arbitration process. This means that while the franchisee must be prepared to cover half the initial arbitration fees, they have the potential to recoup these costs if they win the arbitration case.
This arrangement is fairly common in franchise agreements, as it ensures both parties have a vested interest in a fair and efficient arbitration process. The potential for cost recovery incentivizes each party to present a strong case. However, franchisees should be aware that they will need to have the financial resources to cover their initial share of the arbitration fees and legal costs, with no guarantee of reimbursement.
It is also important to note that any arbitration will be conducted before a single arbitrator in Dallas, Texas, according to the Commercial Arbitration Rules of the American Arbitration Association. Furthermore, any action will be conducted on an individual basis, meaning a franchisee waives their rights to proceed on a consolidated, common, or class action basis.