Who is responsible for covering legal fees and other arbitration costs in a Degree Wellness arbitration?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
14.1 ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT (INCLUDING A BREACH HEREOF) OR THE OPERATION OF THE STUDIO MANAGEMENT COMPANY OR THE PERFORMANCE OF THE MANAGEMENT COMPANY SERVICES OR LICENSED PROVIDER SERVICES SHALL BE SETTLED BY BINDING ARBITRATION IN THE CITY IN WHICH THE PREMISES IS LOCATED, IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN EXISTING. THIS AGREEMENT TO ARBITRATE SHALL BE SPECIFICALLY ENFORCEABLE AND THE ARBITRATION AWARD SHALL BE FINAL AND BINDING, AND JUDGMENT MAY BE ENTERED THEREUPON IN ANY COURT HAVING JURISDICTION OVER THE SUBJECT MATTER OF THE DISPUTE. EACH PARTY TO THE ARBITRATION SHALL PAY SUCH PARTY'S LEGAL FEES AND OTHER COSTS AND EXPENSES OF THE ARBITRATION.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, in the event of arbitration, each party is responsible for their own legal fees and other associated costs and expenses. This means that a franchisee engaging in arbitration with Degree Wellness will need to budget for their own attorney fees, expert witness fees, and any other costs they incur during the arbitration process. This is a fairly standard arrangement in franchise agreements.
This arrangement can have significant financial implications for a prospective Degree Wellness franchisee. Arbitration can be a lengthy and complex process, and legal fees can quickly add up. Franchisees should consider this potential expense when evaluating the overall cost of investing in a Degree Wellness franchise. It is important to note that this fee allocation applies regardless of the outcome of the arbitration. Even if the franchisee prevails, they will still be responsible for their own costs.
While each party bears its own legal and arbitration costs, this does not address the sharing of the arbitrator's fees. The FDD states that the parties shall equally share all costs of arbitration, which likely refers to the arbitrator's fees and administrative costs associated with the arbitration process itself. This division of arbitrator costs is also a common practice in franchise arbitration agreements, aiming to ensure fairness and prevent either party from being unduly burdened by the expenses of the process.
Prospective Degree Wellness franchisees should carefully consider the implications of the arbitration clause and consult with an attorney to understand their rights and obligations in the event of a dispute. Understanding the financial responsibilities associated with arbitration is a crucial part of assessing the overall risk and potential costs of investing in a Degree Wellness franchise.