When is a waiver of exemplary or punitive damages permissible for an Alloy franchisee?

According to Alloy's 2025 Franchise Disclosure Document, specifically regarding Washington state law, a waiver of exemplary, punitive, or similar damages from a franchisee is generally void. However, there is an exception: such a waiver is permissible if it is executed as part of a negotiated settlement after the franchise agreement is already in effect. Additionally, both Alloy and the franchisee must be represented by independent legal counsel during these negotiations. This exception is in accordance with RCW 19.100.220(2), the Revised Code of Washington.

This means that Alloy franchisees in Washington State initially retain their right to seek exemplary or punitive damages, including the possibility of treble damages under certain conditions as per RCW 19.100.190. Alloy cannot enforce a blanket waiver of these damages within the franchise agreement itself. However, if a dispute arises after the franchise agreement is signed, and the franchisee, with their own lawyer, agrees to a settlement that includes waiving the right to seek such damages, that specific waiver can be valid.

This provision protects franchisees from being forced to give up important legal rights upfront. It ensures they have the opportunity to make informed decisions with the advice of independent counsel if a dispute arises later. Prospective Alloy franchisees should be aware of this protection, especially if they are considering investing in a franchise within Washington state. They should also consult with an attorney to fully understand their rights and the implications of any settlement offers that include waiving the right to exemplary or punitive damages.