In a dispute between Aira Fitness and the Developer, what type of damages is each party limited to recovering?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
cago, Illinois metropolitan area. The arbitrators must follow the law and not disregard the terms of this Agreement. Any arbitrator must have at least five years' experience in franchising or in franchise law.
Any unappealed decision of the arbitrator(s) will be final and binding on all parties to the dispute; however, the arbitrator(s) shall have no authority to: (i) stay the effectiveness of any pending termination of this Agreement; (ii) assess punitive or exemplary damages; (iii) certify a class or consolidate an action, or (iv) make any award which extends, modifies or suspends any lawful term of this Agreement or any reasonable standard of business performance that we set. A judgment may be entered upon the arbitration award by any court of competent jurisdiction.
We and you agree to be bound by the provisions of any limitation on the period of time by which claims must be brought under this Agreement or applicable law, whichever expires first.
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, in arbitration, the arbitrator(s) do not have the authority to assess punitive or exemplary damages. Additionally, the arbitrator(s) cannot certify a class or consolidate an action, or make any award which extends, modifies, or suspends any lawful term of the Franchise Agreement or any reasonable standard of business performance that Aira Fitness sets.
In the event that Aira Fitness seeks an injunction or order of specific performance against the developer, the developer agrees to waive any claims for damages if it is later determined that the injunction or specific performance order was issued improperly. This means that if Aira Fitness obtains an injunction against the franchisee, and that injunction is later overturned, the franchisee cannot sue Aira Fitness for damages incurred as a result of the injunction.
This limitation on damages is a significant factor for potential Aira Fitness franchisees to consider. It means that in most disputes resolved through arbitration, neither party can recover punitive damages, which are intended to punish the wrongdoer and are often awarded in cases of egregious misconduct. The waiver of damage claims related to improperly issued injunctions further limits the franchisee's potential recourse against Aira Fitness. Franchisees should seek legal counsel to fully understand the implications of these limitations before signing the Franchise Agreement.