Under what circumstances is a Sales Representative for Exit required to pay attorney's fees?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
- a) Attorney's Fees.
If EXIT [Trade Name] and/or Subfranchisor is required to employ an attorney to enforce any of the provisions of this Agreement, or to institute legal proceedings incident to the enforcement, Sales Representative shall pay, in addition to all other sums to which Sales Representative may be found liable, reasonable attorneys' fees, court costs and litigation expenses incurred by EXIT [Trade Name] and/or Subfranchisor.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a Sales Representative may be required to pay attorney's fees under specific circumstances related to the enforcement of their agreement with Exit. If Exit and/or its Subfranchisor needs to hire an attorney to enforce any part of the Sales Representative Agreement or to start legal proceedings to enforce it, the Sales Representative is responsible for covering reasonable attorney's fees, court costs, and other litigation expenses. This is in addition to any other amounts the Sales Representative might be liable for.
This means that if a Sales Representative breaches the agreement, necessitating legal action from Exit to enforce compliance, the Sales Representative will bear the financial burden of Exit's legal costs. This provision is designed to protect Exit's interests and ensure Sales Representatives adhere to the terms of their agreement. It also serves as a deterrent against violations of the agreement, as Sales Representatives risk incurring significant legal expenses if they fail to comply.
For a prospective Exit Sales Representative, this clause highlights the importance of fully understanding and adhering to the Sales Representative Agreement. Failure to do so could result in not only being liable for damages but also for Exit's legal fees, which can be substantial. It is advisable for Sales Representatives to seek legal counsel to review the agreement before signing to fully grasp their obligations and potential liabilities. This is a fairly standard clause in franchise and related agreements, intended to protect the franchisor's investment in its brand and system.