Who is responsible for paying attorneys' fees and travel expenses initially in a Belocal arbitration?

According to Belocal's 2025 Franchise Disclosure Document, in an arbitration, each party is initially responsible for their own attorneys' fees and travel expenses. Specifically, all arbitration-related expenses, including attorneys' fees and travel expenses, are to be paid initially by the party that incurs them. This means that a Belocal franchisee would need to cover their own legal representation and travel costs to the arbitration hearing.

However, the document also states that the arbitrator has the authority to award the prevailing party the reasonable costs and fees incurred during the arbitration, including attorneys' fees. Therefore, if a Belocal franchisee wins the arbitration case, they may be able to recover the attorneys' fees and travel expenses they initially paid. This creates a potential financial risk for franchisees, as they must be prepared to cover these costs upfront with the possibility of reimbursement later.

In addition to attorneys' fees and travel expenses, the costs and expenses of arbitration paid to the AAA (American Arbitration Association) and to the arbitrator will be initially paid equally by both sides to the arbitration. This differs from the payment of legal and travel costs, where each party is responsible for their own expenses initially. It is important to note that the arbitrator cannot award punitive damages and can only award actual damages sustained by a party.