Who bears the costs of arbitration according to the Casiola Franchise Agreement?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agrees that in the event that an arbitrator in any arbitration proceeding and/or, a court of competent jurisdiction shall issue an award, judgment, decision and/or order finding, holding and/or declaring Franchisee's breach of this Agreement than Franchisor shall also be entitled to the recovery of all reasonable attorney fees, costs and expenses associated with and/or related to such arbitration and/or litigation. Said fees, costs and expenses shall include, but not be limited to, attorney fees, arbitration fees, arbitrator fees, deposition expenses, expert witness fees and filing fees.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to the 2024 Casiola Franchise Disclosure Document, the franchisee is responsible for Casiola's legal costs if the arbitrator rules in Casiola's favor. Specifically, if an arbitrator finds that the franchisee has breached the Franchise Agreement, the franchisee must cover Casiola's reasonable attorney fees, arbitration fees, arbitrator fees, deposition expenses, expert witness fees, and filing fees.
This arrangement means that a Casiola franchisee faces a financial risk in any dispute that goes to arbitration. Even if the franchisee has a strong case, they could be responsible for covering Casiola's legal expenses if the arbitrator ultimately sides with the franchisor. This could create a chilling effect, discouraging franchisees from pursuing legitimate claims against Casiola.
It is fairly common in franchising for the losing party in a legal dispute to cover the prevailing party's legal fees, but prospective franchisees should carefully consider this provision and factor in the potential costs of arbitration when evaluating the Casiola franchise opportunity. Franchisees should seek legal counsel to fully understand the implications of this clause before signing the Franchise Agreement.