Does the Buona franchise agreement allow for consequential, punitive, or exemplary damages in disputes between the franchisor and franchisee?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
sale of this franchise), the relationship of Franchisee and Franchisor, or Franchisee's operation of the Franchised Business, brought by Franchisee must be commenced within one (1) year from the occurrence of the events giving rise to such claims or action, or such claim or action shall be barred.
- 24.9 DAMAGES. FRANCHISOR AND FRANCHISEE HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR CLAIM OF ANY CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES AGAINST THE OTHER, AND AGREE THAT IN THE EVENT OF A DISPUTE BETWEEN THEM EACH SHALL BE LIMITED TO THE RECOVERY OF ANY ACTUAL DAMAGES SUSTAINED BY IT.
- 24.10 Costs and Attorney's Fees.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to the 2025 Buona Franchise Disclosure Document, both Buona and the franchisee waive the right to claim consequential, punitive, or exemplary damages against each other. In the event of a dispute, both parties are limited to recovering only the actual damages they sustained. This waiver applies to disputes resolved through arbitration as well.
This means that if a franchisee believes Buona has breached the franchise agreement, they can only recover direct losses. They cannot seek additional damages intended to punish Buona (punitive) or to compensate for indirect losses resulting from the breach (consequential). Similarly, Buona is also restricted from seeking these types of damages from the franchisee.
This type of clause is relatively common in franchise agreements. It aims to limit the financial exposure of both parties in case of a dispute and encourages resolution based on actual, provable losses. Prospective franchisees should understand that this limitation could impact the potential recovery in a legal dispute with Buona.