How is the 'prevailing party' defined in the context of legal costs for Chocolate Fish Coffee?

According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, in any legal proceeding related to the Franchise Agreement, the non-prevailing party is responsible for covering the prevailing party's attorney fees, costs, and other legal expenses. The document specifies that the "prevailing party" is defined as the party that prevailed on the central litigated issues and obtained substantial relief.

This definition has significant implications for prospective Chocolate Fish Coffee franchisees. If a franchisee initiates legal action against Chocolate Fish Coffee and does not win on the primary issues in the case, securing substantial relief, they will be responsible for Chocolate Fish Coffee's legal costs. Conversely, if the franchisee wins, Chocolate Fish Coffee would be responsible for the franchisee's legal costs.

This clause encourages both parties to carefully assess the merits of their claims before initiating legal action, as the financial consequences of losing could be significant. Franchisees should be aware of this provision and seek legal counsel to understand their rights and obligations under the Franchise Agreement. It is a fairly standard clause in franchise agreements to deter frivolous litigation and ensure that legal disputes are taken seriously.