To what extent do Bang Cookies and its franchisees waive their rights to punitive damages against each other?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
FRANCHISOR AND FRANCHISEE HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR SPECULATIVE DAMAGES AGAINST THE OTHER AND AGREE THAT IN THE EVENT OF A DISPUTE BETWEEN THEM, EXCEPT AS OTHERWISE PROVIDED HEREIN, EACH SHALL BE LIMITED TO THE RECOVERY OF ACTUAL DAMAGES SUSTAINED BY IT, PROVIDED THAT SUCH WAIVER SHALL NOT APPLY TO ANY CLAIM (A) ALLOWED BY FRANCHISOR OR FRANCHISEE FOR ATTORNEY'S FEES OR COSTS AND EXPENSES UNDER THIS AGREEMENT; AND/OR (B) FOR LOST PROFITS BY FRANCHISOR OR FRANCHISEE AND THE OWNERS UPON OR ARISING OUT OF THE TERMINATION OF THIS AGREEMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IF ANY OTHER TERM OF THIS AGREEMENT IS FOUND OR DETERMINED TO BE UNCONSCIONABLE OR UNENFORCEABLE FOR ANY REASON, THE FOREGOING PROVISIONS OF WAIVER BY AGREEMENT OF PUNITIVE, EXEMPLARY, INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER SIMILAR DAMAGES SHALL CONTINUE IN FULL FORCE AND EFFECT.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, both the franchisor and franchisee waive their rights to claim punitive, exemplary, consequential, or speculative damages against each other to the fullest extent permitted by law. This means that in the event of a dispute, both parties are generally limited to recovering only the actual direct damages they sustained.
However, there are exceptions to this waiver. The waiver does not apply to claims for attorney's fees, costs, and expenses if such claims are allowed under the Franchise Agreement. Additionally, the waiver does not extend to claims for lost profits by either Bang Cookies or the franchisee and their owners if these claims arise from the termination of the agreement.
The FDD also states that if any other term of the agreement is found to be unconscionable or unenforceable, the waiver of punitive, exemplary, incidental, indirect, special, consequential, or other similar damages will remain in full effect. This provision is designed to ensure that the waiver of these types of damages remains valid even if other parts of the agreement are challenged and found to be invalid. This type of waiver is relatively common in franchise agreements, as it aims to limit the potential financial exposure of both parties in case of disputes, promoting a focus on actual losses rather than potentially inflated damage claims.