Can an arbitrator assess punitive damages against either party in a Bhc franchise arbitration?

According to Bhc's 2025 Franchise Disclosure Document, an arbitrator does not have the power to assess punitive damages against either party. This is because, to the maximum extent permitted by law, both parties waive their rights to seek punitive damages from one another. This waiver is explicitly stated in the franchise agreement, ensuring that neither the franchisee nor Bhc can be subjected to punitive damages in arbitration.

This provision is designed to create a more predictable and less adversarial arbitration process. Punitive damages are typically awarded to punish a party for egregious misconduct, and their exclusion suggests a focus on resolving disputes through compensation for actual losses rather than through punishment. This can lead to a more streamlined and cost-effective resolution of disputes.

For a prospective Bhc franchisee, this means that in the event of a dispute that goes to arbitration, the potential financial exposure is limited to actual damages, such as lost profits or expenses incurred. It also means that the franchisee cannot seek to punish Bhc through punitive damages, even if they believe Bhc's conduct was particularly egregious. This mutual waiver of punitive damages is a significant aspect of the arbitration agreement and should be carefully considered by anyone evaluating a Bhc franchise.