Does the Bonchon franchise agreement include a waiver preventing franchisees from advancing claims for punitive damages?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
that this Section 32.04 shall not be construed as preventing either party from removing an action or proceeding from state to federal court.
32.05 Waiver of Jury Trial and Punitive Damages
A. The parties to this Agreement (as denominated in Section 32.04) explicitly waive their respective rights to a jury trial in any litigation between them which is authorized or contemplated by
this Agreement, and hereby stipulate that any such trial shall occur without a jury.
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.
32.06 No Consolidated or Class Actions
You and the other Franchisee Parties may only pursue any claim you have against us or the other Indemnitees in an individual legal action or proceeding.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the franchise agreement generally includes a waiver where franchisees, guarantors, and indemnitees waive their rights to claim punitive, exemplary, incidental, indirect, special, consequential, or other similar damages in any action against Bonchon. Franchisees also agree not to pursue claims for punitive damages and are limited to recovering actual damages sustained. However, this requirement is deleted from all Franchise Agreements used in the State of North Dakota and Indiana.
This waiver means that franchisees typically cannot seek damages beyond the actual financial losses they incur. This could significantly limit the potential financial recovery in case of a dispute with Bonchon, even if Bonchon's actions are deemed harmful or negligent. The deletion of this requirement in North Dakota and Indiana provides franchisees in those states with greater legal recourse.
It is important for prospective franchisees to understand the implications of this waiver, especially in states where it is enforced. Franchisees should consult with legal counsel to fully understand their rights and potential limitations on damage claims. This is a fairly common practice in franchising, but the specific terms and enforceability can vary significantly by jurisdiction. The FDD also indicates that in Washington, a release or waiver of rights will not include rights under the Washington Franchise Investment Protection Act under certain conditions.