What damages are the arbitrators prohibited from awarding in a Belocal franchise arbitration?

According to Belocal's 2025 Franchise Disclosure Document, arbitrators are specifically restricted in the types of damages they can award. The document states that arbitrators do not have the authority to award punitive damages. Furthermore, regarding any claim for damages, the arbitrator is limited to awarding only the actual damages sustained by a party.

This limitation on damages in arbitration has significant implications for prospective Belocal franchisees. It means that if a franchisee pursues a claim through arbitration, they can only recover compensation for direct financial losses they have incurred. They cannot seek additional damages intended to punish Belocal for misconduct, which punitive damages are designed to do. This could potentially limit the overall financial recovery available to a franchisee in a dispute.

This type of restriction is not uncommon in franchise agreements, as franchisors often seek to limit their potential liability in dispute resolution. Franchisees should carefully consider this limitation and understand that it could affect their ability to be fully compensated if they have a claim against Belocal that proceeds to arbitration. It is advisable to consult with legal counsel to fully understand the implications of this clause.