Who bears the costs of arbitration for City Publications franchisees?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
- Section 24G of the Franchise Agreement requires binding arbitration.
The arbitration will occur at the forum indicated in Section 24B with the costs being borne by the prevailing party.
Prospective franchisees are encouraged to consult legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of the Franchise Agreement restricting venue to a forum in the State of Georgia.
C. Cost of Enforcement or Defense
If Franchisor or Franchisee is required to enforce this Agreement in a judicial or arbitration proceeding, the prevailing party shall be entitled to reimbursement of its costs, including reasonable accounting and legal fees, in connection with such proceeding.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the costs of arbitration depend on who prevails in the proceeding. Specifically, Section 24G of the Franchise Agreement states that the prevailing party bears the costs of arbitration. This is modified for California franchisees.
For prospective City Publications franchisees, this means that if a dispute arises and goes to arbitration, the party who wins the arbitration case will be entitled to reimbursement of their costs. These costs include reasonable accounting and legal fees associated with the arbitration. This arrangement incentivizes both City Publications and its franchisees to present strong cases, as the losing party will bear the financial burden of both their own and the prevailing party's expenses.
However, the FDD also notes that for franchisees in California, the enforceability of the Georgia forum selection clause and Georgia law application may be challenged under California law. The FDD advises prospective franchisees to seek legal counsel to determine the applicability of California and federal laws regarding venue restrictions to Georgia. This suggests that the standard arbitration clause may not be fully enforceable in California, and a California franchisee might be able to arbitrate closer to home. The FDD states that the arbitration will occur at the forum indicated in Section 24B with the costs being borne by the prevailing party.