In a Clean Your Dirty Face arbitration, can the arbitrator award exemplary damages?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
). All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). Judgment upon the arbitrator's award may be entered in any court of competent jurisdiction.
The arbitrator has the right to award or include in his or her award any relief which he or she deems proper, including, without limitation, money damages (with interest on unpaid amounts from the date due), specific performance, injunctive relief, and attorneys' fees and costs, provided that the arbitrator may not declare any of the trademarks owned by us or our affiliates generic or invalid or, except as expressly provided in this Section 17, award any punitive, exemplary, or multiple damages against any party to the arbitration proceeding (we and you hereby waiving to the fullest extent permitted by law any such right to or claim for any punitive, exemplary, or multiple damages against any party to the arbitration proceedings).
We and you agree to be bound by the provisions of any applicable contractual or statutory limitations provision, whichever expires earlier. We and you further agree that, in any arbitration proceeding, each party must submit or file any controversy, dispute, or claim which would constitute a compulsory counterclaim (as defined by Rule 13 of the Federal Rules of Civil Procedure) within the same proceeding.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Clean Your Dirty Face Franchise Disclosure Document, in most cases, the arbitrator cannot award exemplary damages. The document states that both Clean Your Dirty Face and the franchisee waive any right to claim punitive, exemplary, or multiple damages against each other, to the fullest extent permitted by law.
However, there is an exception to this waiver. The waiver of punitive damages does not apply to either party regarding punitive damages available under federal law. This means that if federal law allows for punitive damages in a particular type of claim, the arbitrator may be able to award them, despite the general waiver.
This waiver and exception have significant implications for prospective Clean Your Dirty Face franchisees. It limits the potential financial recovery in case of a dispute with the franchisor, but it also protects the franchisee from potentially large damage awards. Franchisees should consult with an attorney to understand the specific circumstances under which punitive damages might still be available under federal law.