Does the section regarding legal costs in the Learningrx franchise agreement apply to arbitration?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
- 18.7 Legal Costs.
If either party institutes a legal proceeding in a court of law with valid jurisdiction and prevails entirely or in part in any action at law or in equity against the other party based entirely or in part on the terms of this Agreement, the prevailing party shall be entitled to recover from the losing party, in addition to any judgment, reasonable attorneys' fees, court costs and all of the prevailing party's expenses in connection with any action at law.
This section shall not apply to arbitration as more fully set forth in Section 16 of this Agreement.
The parties agree to each bear their own legal costs and other expenses incurred as part of any arbitration conducted in accordance with this Agreement.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to the 2025 Learningrx Franchise Disclosure Document, the section regarding legal costs does not apply to arbitration. The franchise agreement stipulates that if either party initiates a legal proceeding in a court of law and prevails, they are entitled to recover reasonable attorneys' fees, court costs, and expenses from the losing party. However, this condition is explicitly waived for arbitration proceedings.
Instead, the Learningrx franchise agreement specifies that in the event of arbitration, each party is responsible for bearing their own legal costs and expenses. This means that regardless of the outcome of the arbitration, a franchisee will have to cover their own attorney fees, arbitrator fees, and any other related costs. This is a notable deviation from standard legal proceedings where the prevailing party can often recoup expenses.
This clause has significant implications for prospective Learningrx franchisees. It means that even if a franchisee wins an arbitration case against Learningrx, they will not be able to recover their legal expenses. Conversely, if Learningrx wins, the franchisee cannot expect Learningrx to cover their costs. Franchisees should carefully consider this provision and factor in the potential costs of arbitration when evaluating the franchise opportunity. Understanding this aspect of the agreement is crucial for making informed financial decisions and assessing the overall risk associated with the Learningrx franchise.