Are punitive or exemplary damages allowed in arbitration between Chicken Guy and the franchisee?
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 Franchisee 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.
FRANCHISEE 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. SUBJECT TO THE PARTIES' ARBITRATION OBLIGATIONS, FRANCHISEE AND CHICKEN GUY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO BRING, OR BE A CLASS MEMBER IN, ANY CLASS ACTION SUITS AND THE RIGHT TO TRIAL BY JURY.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, franchisees and Chicken Guy waive the right to claim punitive or exemplary damages against each other in the event of a dispute. The agreement specifies that both parties are limited to recovering actual damages sustained. This waiver applies to the fullest extent permitted by law.
This means that if a franchisee has a dispute with Chicken Guy that goes to arbitration, the arbitrator cannot award damages intended to punish or make an example of the other party. Instead, the arbitrator can only award damages to compensate for actual losses suffered. This limitation is reciprocal, applying equally to both Chicken Guy and the franchisee.
This waiver is a significant legal provision that could impact the potential financial outcome of any dispute between Chicken Guy and a franchisee. Prospective franchisees should understand the implications of waiving the right to seek punitive damages and consider consulting with an attorney to fully assess the risks and benefits before signing the franchise agreement. This type of waiver is relatively common in franchise agreements.