In an action arising from the Alloy franchise agreement, who is responsible for reimbursing costs and expenses, including attorney's fees?

According to Alloy's 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Alloy for court costs or expenses, including attorney's fees, but only if Alloy is the prevailing party in any judicial or arbitration proceeding. This stipulation is specifically applicable in Washington state, as indicated by the reference to RCW (Revised Code of Washington) statutes.

This means that if Alloy initiates legal action against a franchisee and wins, the franchisee may have to cover Alloy's legal costs. Conversely, if the franchisee wins the case, they would not be responsible for Alloy's expenses. This is a notable exception to typical franchise agreements, which often require franchisees to cover the franchisor's legal costs regardless of the outcome.

This protection for franchisees is due to Washington state law (RCW 19.100.180(2)(d), RCW 19.100.190, RCW 19.100.220(2), and RCW 49.62.020), which aims to balance the power dynamic between franchisors and franchisees. Prospective Alloy franchisees in Washington should be aware of these specific legal protections, while those in other states may not have the same safeguards.

It is important for potential franchisees to consult with a legal professional to fully understand their rights and obligations under the franchise agreement and the specific laws of their state.