Who initially bears the costs of arbitration for Belocal franchise disputes in California?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- f. The Agreement requires binding arbitration. The arbitration will occur in the city in which Franchisor maintains its principal business office at the time of the arbitration with the costs being borne by initially be paid equally by the two sides to the arbitration. The arbitrator must award to the prevailing party the reasonable costs and fees, including attorneys' fees, incurred in the arbitration. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code section 20040.5, Code of Civil Procedure section 1281, and the Federal Arbitration Act) to any provisions of the Agreement restricting venue to a forum outside the State of California.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, in California, the costs and expenses of arbitration paid to the AAA (American Arbitration Association) and to the arbitrator are initially split equally between the two parties involved in the arbitration. However, all other arbitration-related expenses, such as attorneys' fees and travel expenses, are initially paid by the party that incurs them.
Despite this initial arrangement, the arbitrator has the authority to award the prevailing party the reasonable costs and fees, including attorneys' fees, that they incurred during the arbitration. This means that while both parties initially share the arbitration costs and cover their own additional expenses, the winning party can potentially recover these costs at the conclusion of the arbitration process.
It's important for prospective Belocal franchisees in California to understand this cost-sharing arrangement, as it can impact their financial planning in the event of a dispute requiring arbitration. Franchisees should also be aware that California law may have specific provisions regarding arbitration clauses, and consulting with legal counsel is recommended to fully understand their rights and obligations.