Does the obligation to pay legal costs for Crab N Spice extend to mediation proceedings?

According to Crab N Spice's 2024 Franchise Disclosure Document, the obligation to pay legal costs does not extend to mediation proceedings. The FDD specifies that in any litigation proceeding (excluding mediation), the losing party must pay the prevailing party's attorney fees, court costs, and other expenses. This indicates a clear distinction between litigation and mediation in terms of cost responsibilities.

This means that if Crab N Spice and a franchisee engage in mediation, the typical "loser pays" rule for legal costs will not apply. Each party will generally bear its own costs associated with the mediation, regardless of the outcome. This can make mediation a more attractive option for resolving disputes, as it reduces the potential financial risk for both parties.

However, it is important to note that this exclusion applies specifically to attorney fees, court costs, and other expenses related to the legal proceeding. Other fees and costs may still be applicable as outlined in Item 6 of the FDD, such as costs for non-compliance or failure to correct issues after notice. Franchisees should carefully review the entire Item 6 to understand all potential financial obligations.