Are punitive damages included in the definition of 'Losses' under the Bhc franchise agreement?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) The term "Losses" means, refers to, and includes all "Expenses" (as defined in section 16.2(e) below), liabilities, obligations, losses, fines, penalties, costs, or damages including all reasonable out of pocket fees and disbursements of legal counsel in the investigation or defense of any of the same or in asserting any party's respective rights hereunder but excluding punitive damages (unless resulting from third party claims).
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the definition of 'Losses' generally excludes punitive damages. However, there is an exception: punitive damages resulting from third-party claims are included in the definition of 'Losses'.
This means that if Bhc is seeking indemnification from a franchisee for losses, the franchisee will generally not be responsible for punitive damages, unless those damages arose from a claim made by someone outside of the Bhc franchise system. This distinction is important for prospective franchisees to understand, as it clarifies the scope of their potential liability under the franchise agreement.
Franchisees should carefully consider this clause and seek legal counsel to fully understand their obligations regarding indemnification and potential exposure to punitive damages arising from third-party claims. Understanding the specific circumstances under which a franchisee might be responsible for punitive damages is crucial for assessing the overall financial risk associated with the Bhc franchise.