Who is responsible for paying the prevailing party's costs in an arbitration involving Christian Brothers Automotive?

According to the 2025 Christian Brothers Automotive Franchise Disclosure Document, the party against whom a final arbitration award is entered must pay the prevailing party's costs. These costs encompass all reasonable expenses, including arbitration filing fees, arbitrator fees, reasonable attorney and expert fees, incurred during the arbitration process, actions to compel arbitration, compliance with the terms of the relevant section, and the confirmation and enforcement of the arbitration award. The arbitrator(s) are required to include these costs as part of the final award. This agreement is binding upon the signatories, their principals, successors, assigns, subsidiaries, or affiliates.

This clause ensures that the prevailing party in an arbitration is not unduly burdened by the costs of the legal process. It also incentivizes parties to engage in arbitration in good faith, knowing that they will be responsible for the other party's expenses if they lose. For a prospective Christian Brothers Automotive franchisee, this means that if a dispute arises and goes to arbitration, they could be responsible for covering Christian Brothers Automotive's legal costs if the arbitrator rules against them. Conversely, Christian Brothers Automotive would be responsible for the franchisee's costs if the franchisee prevails.

It is important for franchisees to understand the full scope of potential costs they could incur in an arbitration. These costs can be substantial, potentially including not only their own attorney's fees but also those of Christian Brothers Automotive. Franchisees should carefully consider this financial risk when deciding whether to pursue arbitration or other forms of dispute resolution. They should also seek legal counsel to fully understand their rights and obligations under the franchise agreement.

This type of "loser pays" provision is not uncommon in franchise agreements, as it aims to deter frivolous claims and encourage efficient dispute resolution. However, the specific terms can vary, so it is crucial for prospective franchisees to carefully review the dispute resolution section of the Franchise Agreement and understand the potential financial implications.