Does Belocal or the franchisee have the right to claim punitive or exemplary damages against the other in a dispute?

According to Belocal's 2025 Franchise Disclosure Document, both Belocal and the franchisee waive the right to claim punitive or exemplary damages against each other. The document states that in the event of a dispute, damage claims are limited to the recovery of actual damages sustained by a party. This waiver applies to any action, proceeding, or counterclaim brought by either party against the other, whether at law or in equity, regardless of whether other parties are involved.

This waiver of punitive damages is a significant point for prospective franchisees. It means that in any dispute with Belocal, a franchisee can only recover direct financial losses and cannot seek additional damages intended to punish Belocal for alleged misconduct. Similarly, Belocal is restricted from seeking punitive damages from the franchisee. This arrangement can limit the financial exposure of both parties in case of a dispute.

Such waivers are relatively common in franchise agreements. Franchise systems often aim to avoid the uncertainty and potentially large financial impact of punitive damage claims. However, franchisees should carefully consider the implications of this waiver, as it could limit their ability to be fully compensated if Belocal engages in serious misconduct that causes substantial harm beyond direct financial losses. Franchisees should consult with a legal professional to fully understand the scope and implications of this waiver.