When is a waiver of exemplary or punitive damages void for a Bee Organized franchise?
Bee_Organized Franchise · 2025 FDDAnswer from 2025 FDD Document
law.
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- Certain Buy-Back Provisions. Provisions in franchise agreements or related agreements that permit the franchisor to repurchase the franchisee's business for any reason during the term of the franchise agreement without the franchisee's consent are unlawful pursuant to RCW 19.100.180(2)(j), unless the franchise is terminated for good cause.
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- Fair and Reasonable Pricing. Any provision in the franchise agreement or related agreements that requires the franchisee to purchase or rent any product or service for more than a fair and reasonable price is unlawful under RCW 19.100.180(2)(d).
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- Waiver of Exemplary & Punitive Damages. RCW 19.100.190 permits franchisees to seek treble damages under certain circumstances. Accordingly, provisions contained in the franchise agreement or elsewhere requiring franchisees to waive exemplary, punitive, or similar damages are void, except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel, in accordance with RCW 19.100.220(2).
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- Franchisor's Business Judgement.
Source: Item 23 — RECEIPTS (FDD pages 54–218)
What This Means (2025 FDD)
According to Bee Organized's 2025 Franchise Disclosure Document, provisions requiring franchisees to waive exemplary, punitive, or similar damages are generally void. However, there is an exception: such waivers are valid if executed pursuant to a negotiated settlement after the franchise agreement is already in effect. In this specific case, both parties must be represented by independent counsel, in accordance with RCW 19.100.220(2). This statute likely refers to Washington state law.
For Bee Organized franchisees in North Dakota, the FDD states that any provisions requiring a franchisee to consent to a waiver of exemplary and punitive damages are not enforceable under Section 51-19-09 of the North Dakota Franchise Investment Law. This amendment to the franchise agreement specifically addresses the enforceability of such waivers within North Dakota, providing additional protection to franchisees in that state.
In New York, the FDD indicates that no statement, questionnaire, or acknowledgement signed by a franchisee can waive claims under any applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by the franchisor. This provision supersedes any other term of any document executed in connection with the franchise, offering further protection to franchisees in New York. Therefore, any waiver of exemplary or punitive damages included in such documents would likely be unenforceable.
In practical terms, this means that a Bee Organized franchisee may still be able to seek exemplary or punitive damages under certain circumstances, despite any initial waiver in the franchise agreement. However, the specific conditions under which such waivers are void can vary depending on the state in which the franchise operates, due to differing state franchise laws. Franchisees should consult with legal counsel to understand their rights and the enforceability of any waivers in their specific jurisdiction.