Does the Bombs Away franchise agreement limit litigation brought for breach of the agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
th laws and regulations applicable to the sale of franchises.
- (f) Performance During Arbitration or Litigation. Unless this Agreement has been terminated, Bombs Away Franchising and Franchisee will comply with this Agreement and perform their respective obligations under this Agreement during the arbitration or litigation process.
- 17.2 Damages. In any controversy or claim arising out of or relating to this Agreement, each party waives any right to punitive or other monetary damages not measured by the prevailing party's actual damages, except damages expressly authorized by federal statute and damages expressly authorized by this Agreement.
- 17.3 Waiver of Class Actions. The parties agree that any claims will be arbitrated, litigated, or otherwise resolved on an individual basis, and waive any right to act on a class-wide basis.
- 17.4 Time Limitation. Any arbitration or other legal action arising from or related to this Agreement must be instituted within two years from the date such party discovers the conduct or event that forms the basis of the arbitration or other legal action. The foregoing time limit does not apply to claims (i) by one party related to non-payment under this Agreement by the other party, (ii) for indemnity under Article 16, or (iii) related to unauthorized use of Confidential Information or the Marks.
- 17.5 Venue Other Than Arbitration. For any legal proceeding not required to be submitted to arbitration, the parties agree that any such legal proceeding will be brought in the United States District Court where Bombs Away Franchising's headquarters is then located. If there is no federal jurisdiction over the dispute, the parties agree that any such legal proceeding will be brought in the court of record of the state and county where Bombs Away Franchising's headquarters is then located. Each party consents to the jurisdiction of such courts and waives any objection that it, he or she may have to the laying of venue of any proceeding in any of these courts.
- 17.6 Legal Costs. In any legal proceeding (including arbitration) related to this Agreement or any guaranty, the non-prevailing party shall pay the prevailing party's attorney fees, costs and other expenses of the legal proceeding. "Prevailing party" means the party, if any, which prevailed upon the central litigated issues and obtained substantial relief.
**ARTICLE 18.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, the franchise agreement does contain certain limitations regarding litigation. Specifically, any arbitration or other legal action arising from or related to the agreement must be initiated within two years from the date the party discovers the conduct or event that forms the basis of the legal action. However, this time limitation does not apply to claims related to non-payment, indemnity, or unauthorized use of confidential information or the Bombs Away marks.
Additionally, the Bombs Away franchise agreement includes a waiver of punitive or other monetary damages not measured by the prevailing party's actual damages, unless such damages are expressly authorized by federal statute or the agreement itself. The agreement also stipulates that any claims will be resolved on an individual basis, with both parties waiving any right to participate in a class action. For legal proceedings not required to be submitted to arbitration, the venue will be the United States District Court where Bombs Away Franchising's headquarters is located, or if there is no federal jurisdiction, the court of record of the state and county where Bombs Away Franchising's headquarters is located.
These provisions have several implications for potential Bombs Away franchisees. The two-year time limitation means franchisees must act quickly if they believe Bombs Away has breached the agreement. The waiver of punitive damages could limit the potential financial recovery in a dispute. The clause specifying individual resolution and waiving class actions prevents franchisees from joining together to pursue claims collectively, which could reduce their bargaining power and increase individual legal costs. The venue clause dictates where legal proceedings must occur, potentially increasing costs for franchisees located far from Bombs Away Franchising's headquarters.
It is important to note that the Maryland Rider to the Franchise Agreement includes stipulations that may override some of the standard terms. For example, any provision of the agreement that provides for a period of limitations for causes of action shall not apply to causes of action under the Maryland Franchise Law, and franchisees must bring an action under such law within three years after the grant of the franchise. Additionally, franchisees in Maryland do not waive their right to file a lawsuit alleging a cause of action arising under the Maryland Franchise Law in any court of competent jurisdiction in the State of Maryland. Similarly, the Minnesota Rider amends the Limitations of Claims section to comply with Minnesota Statutes, Section 80C.17, Subd. 5, stating that "No action may be commenced pursuant to Minnesota Statutes, Section 80C.17 more than three years after the cause of action accrues."
Prospective franchisees should carefully consider these limitations and waivers, along with the applicable state-specific riders, and consult with an attorney to understand their rights and obligations under the Bombs Away franchise agreement.