Who pays the legal costs in a legal proceeding involving a Desi District franchise?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
ct or negligence). | | Prevailing party's legal costs | Our attorney fees, court costs, and other expenses of a legal proceeding, if we are the prevailing party | On demand | In any legal proceeding (including arbitration), the losing party must pay the prevailing party's attorney fees, court costs and other expenses. |
All fees are payable only to us (other than local marketing spend and software subscription charges). All fees are imposed by us and collected by us (other than local marketing spend and software subscription charges). All fees are non-refundable.
Source: Item 6 — OTHER FEES (FDD pages 16–20)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the responsibility for legal costs in a legal proceeding depends on who prevails in the action. If Desi District wins a legal proceeding, the franchisee is responsible for Desi District's attorney fees, court costs, and other expenses. This includes any legal proceeding, including arbitration. Conversely, if the franchisee prevails, Desi District would likely be responsible for the franchisee's legal costs.
Additionally, franchisees must indemnify Desi District and its affiliates against losses from legal actions related to the operation of their franchise. This means the franchisee is responsible for defending Desi District (with counsel reasonably acceptable to Desi District) in any action related to the franchise's operation, and covering their costs and losses. There is an exception: the franchisee is not responsible if the action is caused by Desi District's misconduct or negligence.
This arrangement is fairly typical in franchising. It is designed to protect the franchisor from liabilities arising from the franchisee's business operations. However, it also places a significant financial risk on the franchisee, who could be responsible for substantial legal costs even if they are not directly at fault. Prospective franchisees should carefully consider this potential liability and consult with an attorney to understand the full scope of their obligations.