In the event of arbitration or litigation involving Bhc, who is responsible for covering the legal fees and expenses?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
The prevailing party in any arbitration or litigation to resolve a dispute between any of the parties hereto will be entitled to recover from the losing party reasonable legal fees (and incurred costs of the prevailing party's counsel) and all other "Expenses" (as defined in section 16.2(e) below) incurred by the prevailing party in bringing or defending such arbitration, action or proceeding and/or enforcing any resulting award or judgment (including without limitation arbitration or court filing fees, expert and other witness fees, discovery expenses and compensation payable to the arbitrator), whether incurred prior to or in preparation for or in contemplation of the filing of the action or thereafter. The prevailing party will be determined by the arbitrator or court. This section 14.4 is (i) intended to be expressly severable from the other provisions of this Agreement, (ii) intended to survive any judgment, and (iii) not to be deemed merged into the judgment.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the prevailing party in any arbitration or litigation will be entitled to recover reasonable legal fees and all other expenses from the losing party. This includes costs incurred by the prevailing party's counsel, arbitration or court filing fees, expert and other witness fees, discovery expenses, and compensation payable to the arbitrator. These expenses can be those incurred before, during, or in preparation for filing the action.
This means that if a Bhc franchisee is involved in a dispute with Bhc or another party and wins the case, they can recover their legal fees and associated expenses. Conversely, if the franchisee loses, they will be responsible for covering the legal costs of the other party. The determination of who is the prevailing party will be made by the arbitrator or court handling the dispute.
This clause is designed to be severable from other parts of the agreement, meaning that even if other parts of the agreement are found to be invalid, this provision regarding legal fees will still stand. It also survives any judgment, ensuring that the obligation to cover legal fees remains even after a court decision. This arrangement is fairly standard in franchise agreements, as it aims to discourage frivolous lawsuits and ensure that the party at fault bears the financial burden of resolving disputes.