What limitations on damages does Checkersrallys impose, as described in section 18.10?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
18.10 Limitations on Damages.EXCEPT WITH RESPECT TO YOUR OBLIGATION TO INDEMNIFY US FOR THIRD PARTY CLAIMS UNDER SECTION 17.02, AND EXCEPT WITH RESPECT TO OBLIGATIONS REGARDING USE OF THE MARKS IN SECTION 5 AND THE CONFIDENTIAL INFORMATION IN SECTION 7.01, FRANCHISOR AND FRANCHISEE (AND ITS OWNERS) EACH WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER. YOU AND EACH OF YOUR OWNERS WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT TO RECOVER CONSEQUENTIAL, SPECIAL AND INCIDENTAL DAMAGES FOR ANY CLAIM DIRECTLY OR INDIRECTLY ARISING FROM OR RELATING TO THIS AGREEMENT.
You agree that, for our System to function properly, we should not be burdened with the costs of litigating system-wide disputes. Accordingly, any disagreement between you (and your Owners) and us shall be considered unique as to its facts and shall not be brought as a class action, and you (and each of your Owners) waive any right to proceed against us or any of our shareholders, members, Affiliates, officers, directors, employees, agents, successors and assigns by way of class action, or by way
of a multi-plaintiff, consolidated or collective action. In any legal action between the parties, the court shall not be precluded from making its own independent determination of the issues in question, notwithstanding the similarity of issues in any other legal action involving us and any other franchisee, and each party waives the right to claim that a prior disposition of the same or similar issues precludes such independent determination.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Section 18.10 outlines specific limitations on the types of damages that Checkersrallys and its franchisees can claim against each other. Specifically, both Checkersrallys and the franchisee (including the franchisee's owners) waive their rights to claim punitive or exemplary damages against the other party, to the fullest extent permitted by law.
Furthermore, franchisees and their owners waive the right to recover consequential, special, and incidental damages for any claim that arises directly or indirectly from or relates to the franchise agreement. This means that franchisees are generally barred from seeking compensation for indirect losses, such as lost profits or opportunities, that may result from a breach of the agreement by Checkersrallys.
However, these limitations do not apply to the franchisee's obligation to indemnify Checkersrallys for third-party claims under Section 17.02, nor do they apply to obligations regarding the use of Checkersrallys's trademarks in Section 5 and confidential information in Section 7.01. The agreement also stipulates that any disagreement between the franchisee and Checkersrallys will be considered unique and cannot be brought as a class action. Franchisees also waive their right to participate in multi-plaintiff, consolidated, or collective actions against Checkersrallys and its affiliates.
These limitations on damages and the waiver of class action rights are common in franchise agreements. Prospective franchisees should carefully consider the implications of these provisions, as they can significantly limit the franchisee's ability to recover damages in the event of a dispute with Checkersrallys. It is advisable to seek legal counsel to fully understand the scope and impact of these waivers before signing the franchise agreement.