Is Aw entitled to reimbursement for costs incurred in preparation for filing a claim to enforce the obligations of the agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
18.5 Costs and Attorneys' Fees. If a claim for amounts owed by you to us or our affiliates is asserted in any legal proceeding before an arbitrator, or if we are required to enforce this Agreement in a judicial or arbitration proceeding, we will be entitled to reimbursement of our costs and expenses, including reasonable accounting and legal fees, arbitration administrative charges, arbitrator's compensation, and any other related costs, whether incurred prior to, in preparation for or in contemplation of the filing of any written demand, claim, action, hearing or proceeding to enforce the obligations of this Agreement. If we incur expenses due to your failure to pay when due amounts owing to us; to submit when due any reports, information or supporting records; or any other failure to comply with this Agreement, you shall reimburse us for any such costs and expenses which we incur including but not limited to attorneys' and accounting fees and collection agency fees.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw is entitled to reimbursement of costs and expenses if required to enforce the Franchise Agreement in a legal or arbitration proceeding. This includes costs incurred prior to, in preparation for, or in contemplation of filing any written demand, claim, action, hearing, or proceeding to enforce the obligations of the agreement. These costs include reasonable accounting and legal fees, arbitration administrative charges, arbitrator's compensation, and any other related costs.
This means that if Aw has to take legal action against a franchisee to enforce the terms of the franchise agreement, the franchisee may be responsible for covering Aw's associated costs. This could include situations where the franchisee is not paying amounts owed, failing to submit required reports, or otherwise not complying with the agreement. The franchisee would be responsible for reimbursing Aw for expenses like attorney's fees, accounting fees, and collection agency fees.
This provision is fairly standard in franchise agreements, as it aims to protect the franchisor from incurring losses due to a franchisee's non-compliance. It also incentivizes franchisees to adhere to the terms of the agreement to avoid potential legal action and associated costs. However, it's important to note that the franchisee may be responsible for Aw's legal costs even if the legal proceedings have not yet commenced, but are merely being contemplated.