If Body20 initiates a legal proceeding against a franchisee and fails to substantially prevail, is the franchisee required to reimburse Body20's expenses?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
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, franchisees are not required to reimburse Body20 for legal expenses if Body20 initiates a legal proceeding against them and fails to substantially prevail. Instead, the franchisee is only responsible for reimbursing Body20's expenses, including attorney's fees, if Body20 prevails in enforcing the terms of the Franchise Agreement or any obligation the franchisee owes to Body20. This protection applies whether or not Body20 initiates a legal proceeding.
Conversely, the FDD also states that Body20 will reimburse the franchisee for all reasonable expenses, including attorney's fees, if the franchisee has to enforce the terms of the agreement against Body20 and substantially prevails in court or other formal legal proceedings. This also applies if the franchisee successfully defends against a claim asserted by Body20 in court or other formal legal proceedings.
This arrangement is more favorable for the franchisee than some franchise agreements, which may require the franchisee to cover the franchisor's legal costs regardless of the outcome of a dispute. It ensures that franchisees are not penalized financially for defending themselves against potentially unfounded claims by Body20. It also incentivizes Body20 to ensure the validity of any legal actions it pursues against its franchisees.