Under what circumstances is the prevailing party entitled to reimbursement of costs and expenses, including attorney's fees, in a legal proceeding related to the Buona franchise agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
.9 DAMAGES. FRANCHISOR AND FRANCHISEE HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR CLAIM OF ANY CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES AGAINST THE OTHER, AND AGREE THAT IN THE EVENT OF A DISPUTE BETWEEN THEM EACH SHALL BE LIMITED TO THE RECOVERY OF ANY ACTUAL DAMAGES SUSTAINED BY IT.
- 24.10 Costs and Attorney's Fees. 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.
- 24.11 Liquidated Damages. Franchisor shall have the right to impose liquidated damages against Franchisee in the following events: (a) Franchisee terminates this Agreement without good cause, (b) Franchisor terminates this Agreement based on Franchisee's material breaches under this Agreement, (c) Franchisee abandons the Franchised Business, which for purposes of this Section is failing to open or operate the Franchised Business for more than two (2) consecutive days, (d) loses possession of the premises of the Franchised Business and fails to find a new location and to re-open the Franchised Business or (e) Franchisee transfers an interest in the Franchised Business or the ownership of Franchisee or of the assets of Franchisee or the Franchised Business (or any interest therein) without fully complying with Article XV of this Agreement, whether or not Franchisor terminates 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 may be entitled to reimbursement of costs and expenses, including attorney's fees, under specific circumstances. If a claim is asserted for amounts owed by the franchisee to Buona or its affiliates in a legal proceeding before a court, the prevailing party is entitled to reimbursement of costs and expenses. Similarly, if either Buona or the franchisee is required to enforce the franchise agreement in a judicial proceeding, the prevailing party can recover costs and expenses. These costs encompass reasonable accounting and legal fees, expert witness fees, court costs, and other litigation expenses, regardless of whether they were incurred before, during, or in anticipation of formal legal action.
Additionally, if Buona seeks injunctive relief against a franchisee and prevails, the franchisee may be required to cover Buona's costs. These costs include reasonable attorneys' fees, expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses. However, the franchisee waives any claims for damages if the injunction is later determined to be improperly issued.
These provisions are fairly standard in franchise agreements, as they aim to protect both the franchisor and franchisee by ensuring that the party who is ultimately vindicated in a legal dispute is not unduly burdened by the costs of litigation. It also likely encourages both parties to adhere to the terms of the agreement, knowing that failure to do so could result in financial penalties in addition to other remedies.