In a legal proceeding to enforce the Buona franchise agreement, which party is responsible for reimbursing costs and attorney's fees to the prevailing party?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
If a claim for amounts owed by Franchisee to Franchisor or its affiliates is asserted in any legal proceeding before a court of competent jurisdiction, or if Franchisee or Franchisor is required to enforce this Agreement in a judicial proceeding, the party prevailing in such proceeding will be entitled to reimbursement of its costs and expenses, including reasonable accounting and legal fees, expert witness fees, court costs and other expenses of litigation, whether incurred prior to, in preparation for or in contemplation of the filing of any written demand, claim, action, hearing or proceeding to enforce the obligations of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the prevailing party in a legal proceeding related to amounts owed or enforcement of the franchise agreement is entitled to reimbursement of costs and expenses. This includes reasonable accounting and legal fees, expert witness fees, court costs, and other litigation expenses. These expenses can be incurred prior to, in preparation for, or in contemplation of filing any written demand, claim, action, hearing, or proceeding to enforce the obligations of the agreement. This applies whether the claim is for amounts owed by the franchisee to Buona or its affiliates, or if either party is required to enforce the agreement through a judicial proceeding.
This provision means that if a franchisee sues Buona and loses, the franchisee may be responsible for covering Buona's legal costs, which could be substantial. Conversely, if Buona sues a franchisee and loses, Buona would be responsible for the franchisee's legal costs. This creates a financial risk for either party depending on the outcome of legal actions.
However, in cases where Buona seeks an injunction or order of specific performance, the franchisee agrees to pay Buona's costs of obtaining it, including attorney's fees, expert witness fees, costs of investigation, court costs, and other litigation expenses, regardless of who ultimately prevails. The franchisee also waives any claims for damages if the injunction or specific performance order is later determined to have been issued improperly. This clause shifts the risk more heavily onto the franchisee in cases involving specific performance or injunctive relief sought by Buona.
It is fairly standard in franchise agreements to include a clause that the prevailing party in a dispute is entitled to legal fees. This encourages both parties to act reasonably and to only pursue legal action when there is a strong likelihood of success. Franchisees should carefully consider this clause and understand the potential financial implications before entering into an agreement with Buona.