If a Body20 franchisee asserts a claim against Body20 and Body20 substantially prevails, is the franchisee required to reimburse Body20's expenses?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.9 Attorneys' Fees and Costs.
You agree to reimburse us for all expenses we and our affiliates reasonably incur (including attorneys' fees): (i) to enforce the terms of this Agreement or any obligation owed to us by any of the Franchisee Parties (whether or not we initiate a legal proceeding, unless we initiate and fail to substantially prevail in such court or formal legal proceeding); and (ii) in the defense of any claim any of the Franchisee Parties assert against us on which we substantially prevail in court or other formal legal proceedings.
We agree to reimburse you for all expenses you reasonably incur (including attorneys' fees): (a) to enforce the terms of this Agreement or any obligation owed to you by us (whether or not you initiate a legal proceeding, unless you initiate and fail to substantially prevail in such court or formal legal proceeding); and (b) in the defense of any claim we assert against you on which you substantially prevail in court or other formal legal proceedings
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Body20 for expenses, including attorney's fees, under certain conditions. Specifically, if a Body20 franchisee initiates a claim against Body20, and Body20 substantially prevails in court or other formal legal proceedings, the franchisee must reimburse Body20 for all reasonably incurred expenses, including attorney's fees. This obligation applies regardless of whether Body20 initiates a legal proceeding. However, if Body20 initiates a legal proceeding and fails to substantially prevail, this reimbursement obligation does not apply.
This provision means that a Body20 franchisee bears the risk of having to pay Body20's legal costs if they bring a claim against Body20 and lose. This could create a significant financial burden for the franchisee, potentially deterring them from pursuing legitimate claims against the franchisor. It is important to note the term "substantially prevail" is not defined in this section, so there is some ambiguity as to what constitutes a win for Body20 that triggers the franchisee's reimbursement obligation.
Many franchise agreements contain clauses regarding attorney's fees and costs, but the specifics can vary. Some agreements may require the losing party to pay the prevailing party's fees, while others may have different standards or limitations. Prospective Body20 franchisees should carefully consider this provision and seek legal counsel to fully understand the potential financial implications before signing the Franchise Agreement. Understanding the circumstances under which they might be responsible for Body20's legal expenses is crucial for assessing the overall financial risk of investing in a Body20 franchise.