Who bears the costs of arbitration under the Floors To Go franchise agreement?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
- b. The prevailing party in any litigation, arbitration or other dispute resolution proceeding shall be entitled to recover from the other party: (a) all of its reasonable costs and expenses, including, without limitation, paralegal and attorneys' fees, incurred prior to the commencement of such litigation, arbitration or other dispute resolution proceeding in connection with any failure of the other party to comply with any term, condition or obligation under this Agreement; and (ii) all of its reasonable costs and expenses, including, without limitation, any court fees or costs, any arbitration fees or costs (including any payable to the American Arbitration Association), research fees and costs (including any incurred with online research providers, such as Westlaw), investigation fees and costs, discovery costs, court reporter and transcription fees and costs, compensation payable to the arbitrators, and paralegal and attorneys' fees, whether incurred in connection with such litigation, arbitration or other dispute resolution proceeding, or in connection with any appellate, enforcement, collection or bankruptcy proceedings.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, the prevailing party in any arbitration is entitled to recover costs from the other party. This includes all reasonable costs and expenses incurred prior to the commencement of arbitration related to the other party's failure to comply with the agreement.
Recoverable costs include a comprehensive list of expenses, such as paralegal and attorneys' fees, court fees or costs, arbitration fees (including those payable to the American Arbitration Association), research fees and costs (including online research providers), investigation fees and costs, discovery costs, court reporter and transcription fees and costs, compensation payable to the arbitrators, and legal fees. These costs can be incurred during the litigation, arbitration, or other dispute resolution proceedings, as well as in appellate, enforcement, collection, or bankruptcy proceedings.
This arrangement means that a Floors To Go franchisee who wins an arbitration case against Floors To Go can have their legal and associated costs covered by the franchisor. Conversely, if Floors To Go prevails, the franchisee would be responsible for covering the franchisor's related expenses. This "loser pays" system aims to discourage frivolous claims and encourage both parties to act reasonably during disputes. Prospective franchisees should carefully consider this clause and its potential financial implications.