Who is responsible for litigation expenses in a dispute regarding the Creative World School agreement?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
- (k) Except as may be provided for to the contrary in the AAA procedures with respect to the costs of transcriptions of the arbitration hearing, all fees and expenses of the arbitration shall be borne by the parties equally. Each party shall bear the expense of its own counsel, experts, witnesses, and preparation and presentation of proofs; provided, however, that the arbitrator shall have the authority, in its discretion, at the conclusion of the proceeding, to award costs and attorneys' fees to the prevailing party.
- (l) Any offer of settlement or compromise by either party, whether made before or during the proceeding, is not admissible in the arbitration.
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
According to the 2025 Creative World School Franchise Disclosure Document, in the event of arbitration, all fees and expenses of the arbitration will be shared equally between the parties involved. This excludes transcription costs of the arbitration hearing, which are addressed according to the American Arbitration Association (AAA) procedures.
Each party is individually responsible for covering their own costs related to counsel, experts, witnesses, and the preparation and presentation of their evidence. However, the arbitrator has the discretion to award costs and attorney's fees to the party that prevails in the arbitration.
Offers of settlement or compromise made by either party, whether before or during the arbitration, are not admissible as evidence in the arbitration proceedings. This encourages open settlement discussions without fear of prejudice during the arbitration process.
This arrangement means that a Creative World School franchisee will need to budget for their own legal representation and preparation costs, with the possibility of recovering these expenses if they win the arbitration. Conversely, they could be responsible for not only their own costs but also a portion of the arbitration fees, regardless of the outcome, and potentially the opposing party's legal fees if the franchisor prevails.