Does the Bonchon franchise agreement allow franchisees to claim punitive damages from the franchisor?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
B. You, your Guarantors and your other Indemnitees hereby irrevocably waive, to the fullest extent permitted by law, any right to or claim for any punitive, exemplary, incidental, indirect, special, consequential or other similar damages in any action or proceeding whatsoever between the parties to this Agreement (as defined in Section 32.04) and/or any of their affiliates, and you and such others covenant never to advance or pursue any such claim for punitive damages. You and such others agree that in the event of a dispute, you and such others shall be limited to the recovery from the Indemnitees of any actual damages sustained by you or them. You covenant to secure from any Franchisee Party which does not execute this Agreement his/her/its execution of a writing specified by us, in the Manuals or otherwise, irrevocably confirming the applicability to them of the provisions of this Section 32.05, in such manner and by such time we reasonably specify.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees are restricted from claiming punitive damages from Bonchon. Specifically, the franchise agreement stipulates that franchisees waive any right to claim punitive, exemplary, incidental, indirect, special, consequential, or other similar damages in any action or proceeding against Bonchon. This waiver extends to the franchisee's guarantors and indemnitees as well.
This waiver means that if a Bonchon franchisee believes they have been wronged by Bonchon, their potential recovery is limited to actual damages sustained. They cannot seek additional damages intended to punish Bonchon for their actions. The franchisee also agrees to ensure that any Franchisee Party that does not execute the agreement confirms the applicability of this provision.
This type of clause is relatively common in franchise agreements. It aims to limit the franchisor's potential liability and create more predictable financial outcomes in case of disputes. However, it places a significant restriction on the franchisee's legal recourse, potentially limiting their ability to be fully compensated if Bonchon engages in misconduct that causes substantial harm beyond direct financial losses.