In a Craters & Freighters arbitration proceeding, who is responsible for their own legal fees and costs?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
- 23.3.2 Attorneys' Fees.
The parties to the arbitration proceeding(s) will be solely responsible for their own legal fees and costs.
Such parties will be responsible for their share of the arbitration process fees and costs, subject to Section 23.3.4 of this Agreement.
- 23.3.3 No Withholding or Offset.
Franchisee agrees, during the dispute resolution process set forth in this Section 23, that Franchisee will not withhold payment of any Royalty Fees, Marketing Fund Contributions, Insurance Payments, Technology Fees, or any other payments due to Franchisor or any Affiliate of Franchisor as required by Franchisor pursuant to this Agreement, the Operations Manuals, or otherwise.
- 23.3.4 Cost Responsibility.
If a claim for amounts owed by Franchisee to Franchisor or its affiliates is asserted in any judicial or arbitration proceeding or appeal thereof, or if Franchisor or Franchisee is required to enforce this Agreement in a judicial or arbitration proceeding or appeal thereof, the party prevailing in such proceeding will be entitled to reimbursement of its costs and expenses, including reasonable arbitrators' fees, accounting and legal fees, whether incurred prior to, in preparation for, or in contemplation of the filing of any written demand, claim, action, hearing, or proceeding to enforce the obligations of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, in most arbitration proceedings, each party is responsible for covering their own legal fees and costs. This means that regardless of the outcome of the arbitration, both Craters & Freighters and the franchisee will bear their individual expenses for attorneys and related legal services. They will also be responsible for their share of the arbitration process fees and costs.
However, there is an exception to this rule. If the arbitration involves a claim for amounts owed by the franchisee to Craters & Freighters, or if either party is required to enforce the franchise agreement through arbitration, the prevailing party is entitled to reimbursement of costs and expenses. This reimbursement includes reasonable arbitrators' fees, accounting, and legal fees. This applies whether these fees were incurred before, during, or in anticipation of the arbitration.
For a prospective Craters & Freighters franchisee, this means that while you'll typically need to budget for your own legal costs in case of a dispute, you could potentially recover those costs if you win a dispute initiated by or against Craters & Freighters related to amounts owed or enforcement of the agreement. It's important to carefully consider these conditions and potential financial implications when entering into a franchise agreement.