Under what circumstances does the waiver of punitive damages not apply to Chem Dry franchisees?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
EXCEPT FOR FRANCHISEE'S OBLIGATION TO INDEMNIFY CDI FOR THIRD PARTY CLAIMS UNDER SECTION 7, AND EXCEPT FOR PUNITIVE DAMAGES AVAILABLE TO EITHER PARTY UNDER FEDERAL LAW, CDI AND FRANCHISEE (AND FRANCHISEE'S OWNERS) WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE THAT, IN THE EVENT OF A DISPUTE BETWEEN CDI AND FRANCHISEE, THE PARTY MAKING A CLAIM WILL BE LIMITED TO EQUITABLE RELIEF AND TO RECOVERY OF ANY ACTUAL DAMAGES IT SUSTAINS.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, franchisees generally waive their right to claim punitive damages against Chem Dry, and vice versa. However, there are two specific exceptions to this waiver.
First, the waiver does not apply to the franchisee's obligation to indemnify Chem Dry for third-party claims under Section 7 of the franchise agreement. This means that if Chem Dry incurs damages or expenses due to a claim by a third party that the franchisee is responsible for (as defined in Section 7), the franchisee may still be liable for punitive damages in connection with that indemnification.
Second, the waiver of punitive damages does not extend to punitive damages available to either Chem Dry or the franchisee under federal law. Therefore, if federal law provides for punitive damages in a particular type of dispute between Chem Dry and a franchisee, either party may pursue such damages, notwithstanding the general waiver in the franchise agreement.