How is the 'prevailing party' defined in the context of Bombs Away legal proceedings?

According to Bombs Away's 2024 Franchise Disclosure Document, in any legal proceeding related to the franchise agreement or any guaranty, the non-prevailing party is responsible for covering the prevailing party's attorney fees, costs, and other expenses. The FDD defines the "prevailing party" as the party that prevailed on the central litigated issues and obtained substantial relief.

This definition has significant implications for a prospective Bombs Away franchisee. If a franchisee initiates a legal dispute with Bombs Away and does not win on the primary issues in the case, securing substantial relief, they will be responsible for Bombs Away's legal costs. These costs can include attorney fees, court costs, and other related expenses, which can be substantial. This clause creates a financial risk for franchisees considering legal action against Bombs Away.

Conversely, if Bombs Away initiates legal action against a franchisee and does not prevail on the central issues, Bombs Away would be responsible for the franchisee's legal costs. This provision aims to discourage frivolous lawsuits from either party and encourages both parties to carefully assess the merits of their claims before initiating legal proceedings. Franchisees should carefully consider this clause and its potential financial implications before signing the franchise agreement.

Many franchise agreements include similar clauses regarding legal costs, aiming to allocate the financial burden of litigation to the losing party. However, the specific definition of "prevailing party" can vary. Some agreements might define it more broadly or narrowly, potentially affecting the outcome of cost allocation in a legal dispute. Therefore, prospective franchisees should seek legal counsel to fully understand the implications of this clause and how it might affect their rights and obligations under the franchise agreement.