If Bombs Away prevails in a legal proceeding, who pays Bombs Away's attorney fees?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Currently $600, plus | On demand | Payable only if we conduct an in-person | |
| our out-of-pocket | evaluation of your business because of a | ||
| costs | governmental report, customer complaint | ||
| or other customer feedback, or your | |||
| default or non-compliance with any | |||
| system specification. | |||
| We may cure your non-compliance on | |||
| your behalf (for example, if you do not | |||
| have required insurance, we may purchase | |||
| insurance for you), and you will owe our | |||
| costs plus a 10% administrative fee. | |||
| $7,500 plus any | Payable if you sell your business. | ||
| broker fees and other | |||
| out-of-pocket costs | |||
| we incur | |||
| An amount equal to | |||
| royalty fees and | |||
| marketing fund | |||
| contributions for the | |||
| lesser of (i) 2 years | |||
| or (ii) the remaining | |||
| weeks of the | |||
| franchise term. | |||
| Our costs and losses | You must indemnify and defend (with | ||
| from any legal | counsel reasonably acceptable to us) us | ||
| action related to the | and our affiliates against all losses in any | ||
| operation of your | action by or against us related to, or | ||
| franchise | alleged to arise out of, the operation of | ||
| your franchise (unless caused by our | |||
| misconduct or negligence). | |||
| Our attorney fees, | In any legal proceeding (including | ||
| court costs, and | arbitration), the losing party must pay the | ||
| other expenses of a | prevailing party’s attorney fees, court | ||
| legal proceeding, if | costs and other expenses. | ||
| we are the prevailing | |||
| party |
Source: Item 6 — OTHER FEES (FDD pages 9–13)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, in any legal proceeding, including arbitration, the losing party is responsible for paying the prevailing party's attorney fees, court costs, and other expenses. This means that if Bombs Away wins a legal case against a franchisee, the franchisee would have to cover Bombs Away's legal costs.
This arrangement is fairly common in franchise agreements. It is designed to discourage franchisees from pursuing frivolous lawsuits against the franchisor. It also ensures that Bombs Away can recover its legal expenses if it is forced to take legal action to enforce the franchise agreement or protect its brand.
For a prospective Bombs Away franchisee, this clause represents a significant financial risk. Legal battles can be expensive, and the prospect of paying Bombs Away's legal fees in addition to their own could be financially devastating. Franchisees should carefully consider this risk and factor it into their decision to invest in a Bombs Away franchise. It would be prudent to consult with a legal professional to fully understand the implications of this clause.