What costs and expenses are reimbursable to the prevailing party in a Craters & Freighters judicial or arbitration proceeding?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
yments 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. If Franchisor is required to engage legal counsel in connection with Franchisee's failure to pay when due any amounts owing to Franchisor or any Affiliate of Franchisor, to submit when due any reports, information or supporting records or otherwise to comply with this Agreement, Franchisee will reimburse Franchisor for any of the above-mentioned costs and expenses which Franchisor incurs.
- 23.4 Injunctive Relief. Notwithstanding anything to the contrary, Franchisor and Franchisee will each have the right in a proper case to obtain temporary or preliminary injunctive relief from a court of competent jurisdiction in connection with any Claim; provided, however, that the parties must contemporaneously submit their dispute involving such Claim for mediation and arbitration on the merits in accordance with Section 23.2 and Section 23.3, respectively.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, if a claim for amounts owed by the franchisee to Craters & Freighters or its affiliates is asserted in any judicial or arbitration proceeding, or if Craters & Freighters or the franchisee is required to enforce the Franchise Agreement in such a proceeding, the prevailing party is entitled to reimbursement of its costs and expenses. These reimbursable costs include reasonable arbitrators' fees, accounting fees, and legal fees. These fees can be incurred prior to, in preparation for, or in contemplation of filing any written demand, claim, action, hearing, or proceeding to enforce the obligations of the agreement.
In the context of enforcing a post-term competition restriction, if Craters & Freighters initiates a legal proceeding and prevails, the restricted person (likely the former franchisee) agrees to reimburse Craters & Freighters for its enforcement costs and expenses, including attorneys' fees.
However, in California, this general rule may not always apply. Specifically, in disputes not involving monies owed to Craters & Freighters, all parties are solely responsible for their own legal fees and costs, as well as their share of the arbitration process fees and costs. If the dispute involves monies owed to Craters & Freighters and Craters & Freighters prevails, the franchisee will bear all costs. Prospective franchisees in California are encouraged to seek legal counsel to determine the applicability of California and federal laws to any provisions of a franchise agreement restricting venue to a forum outside the State of California.