Is the provision in the Bhc Multi-Unit Master Franchise Agreement requiring a waiver of punitive or exemplary damages enforceable in California under the California Franchise Investment Law?

According to Bhc's 2025 Franchise Disclosure Document, a provision in the Multi-Unit Master Franchise Agreement that requires a franchisee to waive their right to punitive or exemplary damages against Bhc or its representatives, limiting their recovery to actual damages, is generally not enforceable in California. This is specifically in relation to claims arising under the California Franchise Investment Law. This protection is afforded under California Corporations Code section 31512.

This means that if a Bhc franchisee in California brings a claim under the California Franchise Investment Law, they cannot be forced to waive their right to seek punitive or exemplary damages. Punitive damages are intended to punish the wrongdoer and are awarded in addition to actual damages (compensation for the franchisee's direct losses). This ensures that franchisees retain the ability to seek full legal recourse if Bhc violates the Franchise Investment Law.

It is important for prospective Bhc franchisees in California to understand that while the franchise agreement may contain a waiver of punitive damages, this waiver is not enforceable under California law for claims arising under the California Franchise Investment Law. This provides an added layer of protection for franchisees operating in California.