Who pays the legal costs if Bft enforces Article 13?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall pay all costs and expenses, including, without limitation, reasonable attorneys' fees, incurred by Franchisor in connection with the enforcement of this Article 13. If Franchisee violates any restriction contained in this Article 13, and it is necessary for Franchisor to seek equitable relief, the restrictions contained herein shall remain in effect until two (2) years after such relief is granted. If Franchisee contests the enforcement of Article 13 and enforcement is delayed pending litigation, and if Franchisor prevails, the period of non-competition shall be extended for an additional period equal to the period of time that enforcement of this Article 13 is delayed.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the franchisee is responsible for covering all legal costs and expenses incurred by Bft when enforcing Article 13. This includes reasonable attorney's fees, without limitation. Article 13 likely contains covenants such as non-solicitation agreements.
This means that if Bft believes a franchisee has violated the terms of Article 13, such as soliciting customers or breaching a non-compete agreement, and Bft pursues legal action to enforce those terms, the franchisee will be required to pay Bft's legal bills in addition to any other damages or remedies Bft obtains. This creates a significant financial risk for the franchisee.
Furthermore, if the franchisee contests the enforcement of Article 13 and the enforcement is delayed due to litigation, the period of non-competition can be extended for a time equal to the delay, provided Bft prevails in court. This could substantially lengthen the time a franchisee is restricted from competing with Bft after leaving the system, increasing the potential financial impact.
Bft also has the right to modify the scope of any covenant not to compete without the franchisee's consent. This could allow Bft to broaden the restrictions on a franchisee's activities after they leave the system, making it even more difficult for them to start a competing business. Franchisees should carefully consider these factors and seek legal counsel to fully understand the implications of Article 13 before signing the franchise agreement.