factual

In a legal action between Ella Cafe and a franchisee, who is responsible for paying attorneys' fees?

Ella_Cafe Franchise · 2024 FDD

Answer from 2024 FDD Document

  • (i) Franchisor receives a transfer fee of $10,000 ("Transfer Fee") plus any broker fees and other out-of-pocket costs incurred by Franchisor, including attorneys' fees.

Franchisee shall indemnify, defend, and hold harmless the Franchisor from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities and losses (including, without limitation, reasonable attorney's fees and disbursements) arising from Franchisee's failure to comply with this obligation.

Guarantor shall pay to Ella Coffee Company all costs incurred by Ella Coffee Company (including reasonable attorney fees) in enforcing this Guaranty.

Source: Item 22 — CONTRACTS (FDD page 50)

What This Means (2024 FDD)

According to Ella Cafe's 2024 Franchise Disclosure Document, the guarantor of the franchise agreement is responsible for paying all costs incurred by Ella Coffee Company, including reasonable attorney fees, in enforcing the Guaranty agreement. This means that if Ella Cafe has to take legal action to enforce the guaranty, the guarantor will be responsible for Ella Cafe's legal costs.

Additionally, the franchisee is responsible for indemnifying, defending, and holding harmless Ella Cafe from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, and losses (including, without limitation, reasonable attorney's fees and disbursements) arising from the Franchisee's failure to comply with the obligation to ensure the Coffee House is compliant with the Americans With Disabilities Act.

Furthermore, in the event that a franchisee attempts to transfer their franchise without the consent of Ella Cafe, the franchisee may be responsible for covering Ella Cafe's attorney's fees associated with the transfer. Specifically, Ella Cafe may require the franchisee to pay a transfer fee of $10,000 plus any broker fees and other out-of-pocket costs incurred by Ella Cafe, including attorneys' fees.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.