Does the Benihana franchise agreement allow the arbitration panel to award punitive or exemplary damages?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.3 The Panel is not authorized to award punitive or exemplary damages and any such award shall not be enforceable or enforced by any court.
Except as otherwise provided, each party shall bear its own attorneys' fees, expert witness fees, and other court or arbitration costs incurred in connection with any legal action or arbitration between BNC and Franchisee.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to the 2024 Benihana Franchise Disclosure Document, the arbitration panel is not authorized to award punitive or exemplary damages. This means that if a dispute arises between Benihana and a franchisee that goes to arbitration, the panel cannot impose damages intended to punish Benihana or serve as an example for others.
This limitation on damages is a significant factor for prospective franchisees to consider. While arbitration aims to provide a quicker and more cost-effective resolution compared to litigation, the inability to seek punitive damages may limit the potential financial recovery in certain disputes where Benihana's actions are particularly egregious.
Franchisees should be aware that they will bear their own attorneys' fees, expert witness fees, and other arbitration costs unless otherwise provided. This arrangement is fairly typical in franchise agreements, but it's important to understand the potential financial burden of pursuing a dispute through arbitration. The franchisee should carefully weigh the potential benefits of arbitration against the restrictions and costs involved.