Does the Bft franchise agreement acknowledge that the franchisor may claim expectation or consequential damages, including lost future royalties, if the franchise is terminated due to the franchisee's default?

According to Bft's 2025 Franchise Disclosure Document, the franchise agreement does not prevent Bft from claiming expectation or consequential damages, including lost future royalties, if the franchise is terminated due to the franchisee's default. The agreement explicitly states that Bft may claim these damages. This means that if a franchisee breaches the agreement and Bft terminates the franchise, Bft can seek compensation for not only immediate losses but also for potential future income that would have been earned over the remaining term of the agreement.

This provision has significant implications for prospective franchisees. It highlights the importance of adhering to the franchise agreement to avoid default and potential termination. The franchisee could be liable for substantial damages, including lost future royalties, which could be a considerable financial burden. This clause is designed to protect Bft's financial interests in the event of a franchisee's breach and subsequent termination.

While Bft reserves the right to claim expectation or consequential damages, another section of the agreement includes a waiver of punitive damages. This waiver limits the recovery to actual damages, preventing either party from claiming punitive, exemplary, incidental, indirect, special, or consequential damages against each other. However, the ability for Bft to claim lost future royalties remains, as it is considered a direct result of the franchisee's default. Franchisees should be aware of these clauses and seek legal counsel to fully understand their potential liabilities and rights under the franchise agreement.