Does the limitation on damages for 7 Brew extend to lost profits or damage to goodwill?
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 limitation on damages for 7 Brew explicitly includes lost profits and damage to goodwill. The franchise agreement states that neither party is liable for any indirect, consequential, incidental, special, punitive, or exemplary damages.
This waiver extends to various potential damages, including lost business, lost profits, damage to goodwill or reputation, degradation in the value of brands, trademarks, tradenames, service names or service marks, or injury to persons. The limitation 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 from 7 Brew for issues like lost profits or damage to their business's reputation is severely limited. This clause significantly shifts the risk towards the franchisee, who may have little recourse against the franchisor for these types of financial losses. Franchisees should carefully consider this limitation and seek legal counsel to fully understand its implications before signing the franchise agreement.