Does the 7 Brew agreement limit liability for damages to goodwill or reputation?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) LIMITATION ON DAMAGES: IN NO EVENT SHALL THE PARTIES BE LIABLE TO EACH OTHER, OR TO THEIR RESPECTIVE OFFICERS, EMPLOYEES OR REPRESENTATIVES, OR TO ANY THIRD PARTY, FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES OF OWNER, OWNER'S OFFICERS, EMPLOYEES, REPRESENTATIVES OR INSUREERS, OR OF ANY THIRD PARTY, OF WHATSOEVER NATURE (INCLUDING, BUT NOT LIMITED TO, LOST BUSINESS, LOST PROFITS, DAMAGE TO GOODWILL OR REPUTATION AND/OR DEGRADATION IN VALUE OF BRANDS, TRADEMARKS, TRADENAMES, SERVICES NAMES OR SERVICE MARKS, OR INJURY TO PERSONS) WHETHER ARISING OUT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE, FAILURE TO WARN OR STRICT LIABILITY), CONTRIBUTION, INDEMNITY, SUBROGATION OR OTHERWISE.
Source: Item 23 — RECEIPTS (FDD pages 83–279)
What This Means (2025 FDD)
According to the 2025 FDD, the 7 Brew franchise agreement includes a limitation on damages, which extends to both parties involved. Specifically, it states that neither party is liable for indirect, consequential, incidental, special, punitive, or exemplary damages.
This limitation explicitly includes damages related to lost business, lost profits, damage to goodwill or reputation, and degradation in the value of brands, trademarks, tradenames, service names, or service marks. This waiver applies regardless of whether the damages arise from breach of contract, warranty, tort (including negligence, failure to warn, or strict liability), contribution, indemnity, subrogation, or other legal theories.
For a prospective 7 Brew franchisee, this means that the ability to recover damages for harm to their store's reputation or goodwill is limited by the agreement. While this protects 7 Brew from large claims related to these types of damages, it also limits the franchisee's ability to seek compensation for similar harms caused by the franchisor.
This type of limitation on liability is relatively common in franchise agreements. Franchisees should carefully consider the implications of this clause and seek legal counsel to fully understand their rights and obligations.