Does the Bhc franchise agreement allow for punitive damages to be awarded in arbitration?

According to Bhc's 2025 Franchise Disclosure Document, the franchise agreement does not allow for punitive damages to be awarded in arbitration. The document explicitly states that the arbitrator does not have the power to assess punitive damages against either party. This is reinforced by a clause where both parties waive their rights to seek punitive damages from one another to the maximum extent permitted by law.

This waiver of punitive damages is a significant aspect of the Bhc franchise agreement. It means that in any dispute resolution via arbitration, a franchisee cannot seek, and the arbitrator cannot award, damages intended to punish the other party for particularly egregious behavior. Instead, the focus is limited to compensatory damages, which aim to cover actual losses incurred.

This provision is relatively common in franchise agreements, as franchisors often seek to limit their potential liability. While it protects Bhc from potentially large punitive damage awards, it also limits the franchisee's ability to obtain such damages, even if Bhc engages in misconduct. Prospective franchisees should carefully consider this limitation and its potential impact on their rights and remedies in case of a dispute.