When is a waiver of exemplary or punitive damages void for an Aerus franchise?

According to Aerus's 2025 Franchise Disclosure Document, a waiver of exemplary and punitive damages included in the Franchise Agreement may not be enforceable under North Dakota law. This means that if an Aerus franchisee operates in North Dakota, the standard waiver of these types of damages might not hold up in court, potentially allowing the franchisee to seek such damages from Aerus under certain circumstances, even if the agreement contains a waiver.

This provision is part of the North Dakota Addendum to the Franchise Agreement, which addresses several areas where the standard agreement might conflict with North Dakota law. These areas include releases connected to renewals, covenants not to compete, choice of law, consent to jurisdiction, and consent to termination or liquidated damages. The addendum clarifies that if any part of the Franchise Agreement is inconsistent with North Dakota law, the state's law will take precedence.

For a prospective Aerus franchisee in North Dakota, this is a beneficial provision. It ensures that they are not bound by clauses in the Franchise Agreement that contradict the protections provided by North Dakota's Franchise Investment Law. It is important for potential franchisees to carefully review the North Dakota Addendum and understand their rights under state law, especially concerning waivers and other potentially restrictive clauses in the agreement.

It's worth noting that similar addenda may exist for other states with franchise-specific laws, as indicated by the list of state addenda included in the FDD. Franchisees should always consult with legal counsel to understand how state laws impact their franchise agreement.