Is an All County arbitrator allowed to assess punitive or exemplary damages?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
The arbitrator must follow the law and not disregard the terms of this Agreement.
The arbitrator must have at least five (5) years of significant experience in commercial law.
The arbitrator may not consider any settlement discussions or offers that might have been made by either you or us.
The arbitrator may not under any circumstances (a) stay the effectiveness of any pending termination of this Agreement, (b) assess punitive or exemplary damages, (c) certify a class or a consolidated action, or (d) make any award which extends, modifies or suspends any lawful term of this Agreement or any reasonable standard of business performance that we set.
Source: Item 23 — Receipts (FDD pages 43–157)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, an arbitrator is specifically prohibited from assessing punitive or exemplary damages. The FDD states that the arbitrator "may not under any circumstances ... (b) assess punitive or exemplary damages". This restriction is part of the broader agreement that any arbitration must adhere to the law and the terms of the franchise agreement.
This limitation on the arbitrator's powers is significant for prospective franchisees. It means that in any dispute resolution via arbitration, the arbitrator cannot award damages intended to punish All County for misconduct or to set an example. Franchisees are limited to recovering actual damages they sustain. This could impact the potential financial recovery in a dispute, especially if the franchisee believes All County's actions were particularly egregious.
Furthermore, All County and the franchisee waive any right to claim punitive or exemplary damages against each other, except in specific cases related to the franchisee's obligation to indemnify All County or claims brought by All County against the franchisee for unauthorized use of trademarks or confidential information. This mutual waiver reinforces the intent to limit damage claims to actual losses and equitable relief, potentially reducing the financial risks associated with disputes but also limiting potential upside in damage awards.