Does the Bonchon Franchise Agreement require franchisees to waive their right to punitive or exemplary damages against Bonchon or its representatives, limiting recovery to actual 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.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Franchise Agreement does include a provision that requires franchisees to waive their rights to punitive or exemplary damages. Specifically, franchisees agree to waive any right to claim punitive, exemplary, incidental, indirect, special, consequential, or other similar damages in any action or proceeding against Bonchon. The agreement limits the franchisee's recovery to actual damages sustained by them. This waiver extends not only to the franchisee but also to their guarantors and other indemnitees.
This means that if a Bonchon franchisee experiences damages due to Bonchon's actions, they can only recover the direct financial losses they incurred. They cannot seek additional compensation for punitive damages, which are intended to punish the wrongdoer for egregious behavior. This limitation on damages could significantly impact the potential recovery in a dispute with Bonchon.
However, there are exceptions to this waiver. In California, under the California Franchise Investment Law, these provisions are not enforceable for any claims franchisees may have under that law. Similarly, in North Dakota, this requirement is deleted from all Franchise Agreements used in the state. Prospective franchisees should be aware of these limitations and exceptions, and consult with legal counsel to understand their rights and potential remedies in case of a dispute with Bonchon.