Who bears the costs of collection if Buns On Fire enforces the Guaranty?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
"The prevailing party will be entitled to recover from the losing party reasonable attorneys' fees, experts' fees, court costs and all other expenses of litigation, if the prevailing party prevails in any
action instituted against the losing party to secure or protect its rights under this Agreement, or to enforce the terms of this Agreement, or in any action commenced or joined in by the losing party against the prevailing party."
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, the prevailing party in any action to enforce the terms of the agreement is entitled to recover costs from the losing party. This includes reasonable attorneys' fees, experts' fees, court costs, and all other expenses of litigation. This clause applies to actions instituted by either party to secure or protect their rights under the agreement.
For a Buns On Fire franchisee, this means that if Buns On Fire has to take legal action to enforce the Guaranty and they win the case, the guarantor will be responsible for covering Buns On Fire's legal expenses. Conversely, if the guarantor wins, Buns On Fire would be responsible for the guarantor's legal costs. This creates a financial risk for both parties involved in a dispute.
It is important to note that the specific terms of the Guaranty and Franchise Agreement should be carefully reviewed to understand the full scope of potential liabilities. Franchisees should consult with an attorney to fully understand their rights and obligations under the agreement, especially concerning dispute resolution and cost allocation.