In a dispute, is Beggars Pizza limited to the recovery of actual damages?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 25.5 WAIVER OF RIGHT TO JURY TRIAL AND PUNITIVE DAMAGES.
FRANCHISOR AND FRANCHISEE HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY AGREE AS FOLLOWS: (A) FRANCHISOR AND FRANCHISEE HEREBY EXPRESSLY AND IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT BY EITHER OF THEM AGAINST THE OTHER, WHETHER OR NOT THERE ARE OTHER PARTIES IN SUCH ACTION OR PROCEEDING, AND (B) FRANCHISOR AND FRANCHISEE HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR CLAIM OF ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE THAT IF A DISPUTE BETWEEN THEM ARISES, EACH WILL BE LIMITED TO THE RECOVERY OF ANY ACTUAL DAMAGES SUSTAINED.
To the extent any of the provisions of this Section 25.5 are inconsistent with the provisions of Section 705/41 of the Illinois Franchise Disclosure Act of 1987, the provisions of Section 705/41 of the Act will apply.
- 25.6 LIMITATION OF CLAIMS.
ANY CLAIMS OR ACTIONS ARISING OUT OF OR RELATING TO THE AGREEMENT, THE RELATIONSHIP OF FRANCHISEE AND FRANCHISOR, OR FRANCHISEE'S OPERATION OF THE RESTAURANT BROUGHT BY FRANCHISEE AGAINST FRANCHISOR MUST BE COMMENCED WITHIN ONE (1) YEAR FROM THE OCCURRENCE OF THE FACTS GIVING RISE TO SUCH CLAIMS OR ACTION, OR SUCH CLAIMS OR ACTION WILL BE BARRED.
- 25.7 Injunctive Relief.
Nothing herein contained (including, without limitation, Section 25.2 and Section 25.3) will bar Franchisor's right to obtain injunctive relief from a court of competent jurisdiction without any requirement for Franchisor to post a bond against threatened conduct that will cause it loss or damage under the usual equity rules including the applicable rules for obtaining specific performance, restraining orders, and preliminary injunctions.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Beggars Pizza Franchise Disclosure Document, in the event of a dispute, both Beggars Pizza and the franchisee waive the right to claim punitive or exemplary damages against each other. This means that any recovery will be limited to actual damages sustained by either party.
This waiver has significant implications for a prospective Beggars Pizza franchisee. It means that if Beggars Pizza breaches the franchise agreement, the franchisee can only recover the direct financial losses they have incurred. They cannot seek additional damages intended to punish Beggars Pizza for their conduct. Similarly, Beggars Pizza's recovery from a franchisee is limited to actual damages.
However, this waiver is not absolute. The FDD states that if any part of this provision is inconsistent with the Illinois Franchise Disclosure Act of 1987, the provisions of that Act will take precedence. This suggests that there may be circumstances under Illinois law where the waiver of punitive damages is not enforceable. Prospective franchisees should consult with an attorney to understand the full implications of this waiver and how it may be affected by state law.
The Beggars Pizza franchise agreement also includes a clause that requires any claims or actions brought by the franchisee against Beggars Pizza to be commenced within one year of the event giving rise to the claim. Failure to do so will bar the claim. Beggars Pizza, however, retains the right to seek injunctive relief from a court without posting a bond to prevent actions that would cause them loss or damage.