In a legal proceeding regarding the City Wide franchise agreement, does the obligation of the non-prevailing party to pay costs accrue from the commencement date of the proceedings?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
Should either party institute or participate in a legal or equitable proceeding against the other seeking to enforce or interpret this Agreement, the non-prevailing party in the proceeding will pay the prevailing party's costs (whether by final judgment or out of court settlement), expert and professional fees, and attorney's fees, including reimbursement of in-house counsel expenses at a reasonable rate comparable to fees generally charged in the legal community for outside counsel, and all costs and fees on appeal.
Said obligation of the nonprevailing party will be deemed to accrue on the date of commencement of such proceedings.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if either party initiates legal action to enforce or interpret the franchise agreement, the non-prevailing party is responsible for covering the prevailing party's costs. These costs include expert and professional fees, attorney's fees (including in-house counsel expenses at a reasonable rate), and all costs and fees associated with appeals.
Specifically, the obligation for the non-prevailing party to pay these costs is deemed to begin accruing from the date the legal proceedings commence. This means that from the very start of any legal action, the non-prevailing party is accumulating financial responsibility for the prevailing party's legal expenses.
This provision in the City Wide franchise agreement serves as a potential deterrent against frivolous lawsuits. It also ensures that the prevailing party is fully compensated for the expenses incurred in enforcing their rights under the agreement. For a prospective franchisee, this clause highlights the importance of carefully assessing the merits of any potential legal claim against City Wide, as they could be liable for significant costs if they do not prevail in court.