What happens if a party requesting an appeal does not prevail in the appeal of a Stretch Zone arbitration?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, a party requesting appeal that does not prevail on the appeal will pay the attorneys' fees and other costs that the other party incurred in responding to the appeal.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, a party requesting an appeal of an arbitration decision who does not win the appeal will be responsible for covering the legal costs of the opposing party. Specifically, the appealing party must pay the attorneys' fees and other costs that the other party incurred while responding to the appeal.
This provision means that a Stretch Zone franchisee who initiates an appeal of an arbitration decision faces a significant financial risk. If the appeal is unsuccessful, the franchisee will not only bear their own legal expenses but also be required to pay the legal fees of Stretch Zone (or any other opposing party). This can create a substantial financial burden, potentially deterring franchisees from pursuing appeals, even if they believe the initial arbitration outcome was unjust.
It is important to note that the party requesting the appeal must pay all expenses charged by the arbitration appeal panel and/or arbitration organization in the appeal and must post any bond deemed appropriate by the arbitration organization or arbitration appeal panel. This upfront cost, combined with the risk of paying the opposing party's legal fees, makes appealing an arbitration decision a potentially expensive undertaking for a Stretch Zone franchisee. Franchisees should carefully consider the merits of their case and the potential financial implications before deciding to appeal an arbitration award.