If Chocolate Bash prevails in a legal proceeding, who pays their attorney fees?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Our out-of-pocket | When billed | We may cure your non-compliance on | |
| costs and internal | your behalf (for example, if you do not | ||
| cost allocation, plus | have required insurance, we may purchase | ||
| 10% | insurance for you), and you will owe our | ||
| costs plus a 10% administrative fee. | |||
| When transfer | Payable if you sell your business. | ||
| occurs | |||
| An amount equal to | On demand | ||
| royalty fees and | |||
| marketing fund | |||
| contributions for the | |||
| lesser of (i) 2 years | |||
| or (ii) the remaining | |||
| weeks of the | |||
| franchise term. | |||
| Our costs and losses | You must indemnify and defend (with | ||
| from any legal | counsel reasonably acceptable to us) us | ||
| action related to the | and our affiliates against all losses in any | ||
| operation of your | action by or against us related to, or | ||
| franchise | alleged to arise out of, the operation of | ||
| your franchise (unless caused by our | |||
| misconduct or negligence). | |||
| Our attorney fees, | In any legal proceeding (including | ||
| court costs, and | arbitration), the losing party must pay the | ||
| other expenses of a | prevailing party’s attorney fees, court | ||
| legal proceeding, if | costs and other expenses. | ||
| we are the prevailing | |||
| party |
Source: Item 6 — OTHER FEES (FDD pages 9–13)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, the losing party in a legal proceeding is responsible for covering the prevailing party's attorney fees, court costs, and other related expenses. This applies to any legal proceeding, including arbitration. Therefore, if Chocolate Bash wins a legal dispute, the opposing party would be required to pay Chocolate Bash's legal costs.
This arrangement is fairly standard in franchise agreements. It aims to discourage frivolous lawsuits and ensure that the party at fault bears the financial burden of legal action. For a prospective Chocolate Bash franchisee, this clause means that while they could be responsible for Chocolate Bash's legal fees if they lose a case, they are also protected in the event that they win a legal dispute with Chocolate Bash.
It is important for a potential Chocolate Bash franchisee to understand the implications of this clause. They should carefully consider the potential legal risks associated with operating a Chocolate Bash franchise and factor in the possibility of incurring legal expenses, whether as the losing or prevailing party. Consulting with a legal professional to review the franchise agreement is advisable to fully grasp the scope of this provision and its potential impact.