Are punitive or exemplary damages allowed against either party in arbitration involving Chicken Guy?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) The arbitrator will have the right to award or include in the award any relief which the arbitrator deems proper under the circumstances, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and reasonable attorneys' fees and costs, provided that the arbitrator will not have the right to amend or modify the terms of this Agreement, declare any Proprietary Marks generic or otherwise invalid, or award any punitive or exemplary damages against either party (Chicken Guy and Developer hereby waiving to the fullest extent permitted by law any right to or claim for any punitive or exemplary damages against the other).
**G.
WAIVER OF CERTAIN DAMAGES AND RIGHTS.
DEVELOPER AND CHICKEN GUY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT OR CLAIM OF ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST EACH OTHER AND AGREE THAT, IN THE EVENT OF A DISPUTE BETWEEN THEM, EACH SHALL BE LIMITED TO THE RECOVERY OF ACTUAL DAMAGES SUSTAINED BY IT.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, both Chicken Guy and the franchisee (referred to as Developer) waive the right to claim punitive or exemplary damages against each other in the event of a dispute. This waiver applies to the fullest extent permitted by law, meaning that neither party can seek these types of damages in arbitration or judicial proceedings. Instead, both parties are limited to recovering actual damages sustained.
This waiver is significant for prospective franchisees because it limits the potential financial recovery in case of a dispute with Chicken Guy. While actual damages can cover direct financial losses, they do not include additional penalties intended to punish the breaching party. This could be a disadvantage for a franchisee if Chicken Guy engages in misconduct that causes substantial harm but does not result in easily quantifiable financial losses.
It is important to note that this waiver does not prevent a franchisee from seeking other forms of relief, such as money damages (with interest), specific performance, injunctive relief, and reasonable attorneys' fees and costs, as deemed proper by the arbitrator. However, the arbitrator cannot amend or modify the terms of the franchise agreement or declare any Proprietary Marks generic or otherwise invalid. Prospective franchisees should carefully consider the implications of waiving punitive and exemplary damages and consult with legal counsel to understand their rights and options.