How are legal costs associated with loss contingencies treated by Buff City Soap?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
Resolution of Disputes. Any disputes between Releasee and Company regarding this Agreement or any other aspect of the relationship between Releasee and Company which results in a legal or quasi-legal action being initiated, Texas laws and rules shall apply to the extent allowable. Jurisdiction and venue for any legal or quasilegal action shall only be with a state court in Dallas, Texas. Each party will bear its own court costs and attorneys' fees except that the prevailing party shall recover its legal costs and fees relating to that dispute, including attorneys' fees and including any costs of collection, whether pre-litigation or otherwise.
Source: Item 6 — , Securities Offering Fee, in the amount column is revised to state the following: (FDD pages 216–303)
What This Means (2025 FDD)
Based on the 2025 FDD, Buff City Soap addresses legal costs in the context of dispute resolution. In cases of disputes between a franchisee (Releasee) and Buff City Soap Franchising, LLC (Company) that escalate to legal action, Texas laws will govern the proceedings, and the venue will be a state court in Dallas, Texas.
The FDD stipulates that each party is initially responsible for their own court costs and attorneys' fees. However, there is a provision that shifts this responsibility: the party that prevails in the legal dispute is entitled to recover their legal costs and fees from the other party. This includes attorneys' fees and any costs associated with the collection of payments, whether these collection efforts occur before litigation or during the legal process.
This arrangement means that a Buff City Soap franchisee entering into a dispute with the franchisor faces the risk of not only incurring their own legal expenses but also potentially having to cover the franchisor's legal costs if the franchisee does not win the case. Conversely, it also provides an opportunity for the franchisee to recover their legal expenses if they prevail in the dispute. This type of 'loser pays' clause is not uncommon in franchise agreements, but franchisees should carefully consider the potential financial implications before initiating legal action against Buff City Soap.