In the event of a legal dispute regarding the Anago franchise agreement, is the prevailing party entitled to recover pre-institution attorneys' fees?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
SECTION 18.9 ENFORCEMENT COSTS.
If any legal action or other proceeding is begun for the enforcement of this Agreement, or for an alleged dispute, breach, default or misrepresentation under any provision of this Agreement, the prevailing party is entitled to recover reasonable pre-institution and post-institution attorneys' fees, court costs and all expenses even if not taxable as court costs (including all fees and expenses incident to appellate, bankruptcy and post-judgment proceedings), incurred in the action or proceeding, in addition to any other relief that the party is entitled. Attorneys' fees include paralegal fees, administrative costs, investigative costs, costs of expert witnesses, court reporter fees, sales and use taxes, if any, and all other charges billed by the attorneys to the prevailing party. If, short of filing a legal proceeding or action, We take measures to enforce compliance of Your obligations to pay when due any monies owed under this Agreement or submit when due any reports, information or supporting Records, or for any failure otherwise to comply with this Agreement, You must reimburse Us on demand for all of the costs and expenses (including reasonable attorneys' fees) We incur in doing so.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, in the event of a legal dispute, the prevailing party may be entitled to recover reasonable pre-institution attorneys' fees. Specifically, if any legal action or other proceeding is initiated to enforce the franchise agreement, or due to an alleged dispute, breach, default, or misrepresentation under any provision of the agreement, the prevailing party has the right to recover these fees. This also extends to court costs and all expenses, even those not typically taxable as court costs. These recoverable expenses include fees and expenses related to appellate, bankruptcy, and post-judgment proceedings.
This provision means that if an Anago franchisee or Anago itself wins a legal dispute related to the franchise agreement, the winner can recoup the costs of their attorneys, including the fees for work done before the lawsuit was even filed. This can significantly reduce the financial burden of litigation. The definition of attorneys' fees is broad, encompassing paralegal fees, administrative costs, investigative costs, expert witness costs, court reporter fees, sales and use taxes, and all other charges billed by the attorneys.
Furthermore, Anago may take measures to enforce compliance with the agreement without filing a legal proceeding. If Anago incurs costs and expenses, including reasonable attorneys' fees, to enforce a franchisee's obligations to pay monies owed, submit reports, or otherwise comply with the agreement, the franchisee must reimburse Anago for these costs on demand. This clause incentivizes franchisees to adhere to the terms of the agreement to avoid incurring additional expenses. It is important to note that this applies to both pre-institution and post-institution fees, offering comprehensive coverage for legal expenses incurred during enforcement.
This is a fairly standard clause in franchise agreements, as it aims to make the wronged party whole and deter breaches of contract. However, prospective Anago franchisees should carefully review this section with a legal professional to fully understand their rights and obligations regarding legal disputes and associated costs.