For a Buns On Fire franchisee, what is the significance of being the 'prevailing party' in an action related to the agreement?
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' clause in Item 23 has significant financial implications for franchisees involved in legal disputes. If a Buns On Fire franchisee wins a lawsuit against the franchisor, or successfully defends against a lawsuit initiated by the franchisor, the franchisee is entitled to recover reasonable legal costs. These costs include attorney's fees, expert witness fees, court costs, and other litigation expenses. This provision aims to protect the rights of the prevailing party and ensure that they are not financially burdened by legal costs when enforcing their rights under the franchise agreement.
Conversely, if the Buns On Fire franchisee loses a lawsuit against the franchisor, the franchisee will be responsible for covering the franchisor's legal expenses. This creates a financial risk for franchisees who pursue legal action against Buns On Fire and lose. The franchisee should carefully consider the potential costs and benefits before initiating any legal proceedings. This clause is fairly standard in franchise agreements, as it aims to deter frivolous lawsuits and ensure that both parties act in good faith.
It is important to note that the specific definition of 'prevailing party' and the scope of recoverable expenses can be subject to interpretation by the courts. A Buns On Fire franchisee should consult with an experienced franchise attorney to fully understand the implications of this clause and to assess the strength of their legal position before initiating or defending against any legal action. This clause underscores the importance of attempting to resolve disputes through negotiation or mediation before resorting to litigation, as the financial consequences of losing a lawsuit can be substantial.