Does the Bft franchise agreement limit recovery to actual damages in the event of a dispute?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.7 Waiver of Punitive Damages. The Parties hereby waive to the fullest extent permitted by law, any right to or claim for any punitive, exemplary, incidental, indirect, special or consequential damages (including, without limitation, lost profits) against each other arising out of any cause whatsoever (whether such cause be based in contract, negligence, strict liability, other tort or otherwise) and agrees that in the event of a dispute, recovery is limited to actual damages.
If any other term of this Agreement is found or determined to be unconscionable or unenforceable for any reason, the foregoing provisions shall continue in full force and effect, including, without limitation, the waiver of any right to claim any consequential damages.
Nothing in this Section or any other provision of this Agreement shall be construed to prevent
Franchisor from claiming and obtaining expectation or consequential damages, including lost future royalties for the balance of the Term if it is terminated due to Franchisee's default, which the Parties agree and acknowledge Franchisor may claim under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the franchise agreement includes a waiver of punitive damages, limiting recovery to actual damages in the event of a dispute. Specifically, both Bft and the franchisee waive any right to claim punitive, exemplary, incidental, indirect, special, or consequential damages against each other. This waiver applies to any cause of action, whether based in contract, negligence, strict liability, tort, or otherwise.
This means that if a dispute arises between Bft and a franchisee, the franchisee will generally only be able to recover direct financial losses that can be proven. They cannot seek additional damages intended to punish the other party or to compensate for indirect losses like lost profits. However, Bft does retain the right to claim expectation or consequential damages, including lost future royalties, if the agreement is terminated due to the franchisee's default.
This limitation on damages is a significant factor for prospective franchisees to consider. While it provides some protection against excessive claims from Bft, it also restricts the franchisee's potential recovery in case Bft breaches the agreement. Franchisees should carefully evaluate the potential financial impact of this clause and consider seeking legal advice to fully understand their rights and obligations.
The agreement also specifies that the parties waive their right to a jury trial and agree to conduct proceedings on an individual basis, not as part of a class action. These provisions collectively shape the legal landscape within which disputes between Bft and its franchisees will be resolved, emphasizing individual accountability and limiting the scope of potential financial recoveries.