For a Jersey Mikes franchisee, under what condition does a provision requiring reimbursement for court costs or expenses, including attorneys' fees, apply?

According to Jersey Mikes' 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Jersey Mikes for court costs or expenses, including attorney's fees, under a specific condition. This obligation arises only if Jersey Mikes is the prevailing party in any judicial or arbitration proceeding.

This provision means that a Jersey Mikes franchisee is not automatically responsible for covering the franchisor's legal costs. The franchisee's responsibility to reimburse Jersey Mikes for these costs is contingent upon the outcome of a legal dispute. If Jersey Mikes wins the case, the franchisee may have to pay those costs. However, if the franchisee prevails or the outcome is not in favor of Jersey Mikes, the franchisee would not be required to cover the franchisor's legal expenses.

This type of clause is relatively common in franchise agreements. It aims to protect the franchisor from incurring legal costs when they are successful in enforcing the franchise agreement or defending against claims. However, it also places a financial risk on the franchisee, as they could be responsible for significant legal fees if they lose a dispute with Jersey Mikes. Franchisees should carefully consider this potential financial burden and factor it into their risk assessment before investing in a Jersey Mikes franchise.