Does the limitation on damages in a dispute with Crave Cookies limit the franchisee's obligation to indemnify Crave Cookies Franchising?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.2 Damages. In any controversy or claim arising out of or relating to this Agreement, each party waives, to the fullest extent permitted by law, any right to punitive, exemplary, incidental, indirect, special, consequential or other similar damages, including, but not limited to, loss of profits, against the other and agrees that, in the event of a Dispute between them, the party making a claim will be limited to equitable relief and to the recovery of actual damages sustained, without limiting Franchisee's obligation to indemnify Crave Cookies Franchising pursuant to this Agreement, or other monetary damages not measured by the prevailing party's actual damages, except damages expressly authorized by federal statute and damages expressly authorized by this Agreement.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2025 FDD)
According to Crave Cookies' 2025 Franchise Disclosure Document, the limitation on damages in a dispute does not limit the franchisee's obligation to indemnify Crave Cookies Franchising. Specifically, while both parties waive rights to punitive, exemplary, incidental, indirect, special, consequential, or similar damages, this waiver explicitly states that it does not limit the franchisee's obligation to indemnify Crave Cookies Franchising under the agreement.
This means that even if a franchisee is in a dispute with Crave Cookies and is limited in the types of damages they can claim, their separate obligation to cover Crave Cookies' losses (indemnification) remains fully in effect. The franchisee could still be responsible for covering Crave Cookies' legal costs and other losses if a claim arises due to the franchisee's business operations, as defined in the indemnity clause.
This distinction is important for prospective franchisees to understand. While the damages clause aims to limit exposure in disputes between the franchisor and franchisee, the indemnity clause places a potentially significant financial responsibility on the franchisee to protect Crave Cookies from losses related to the franchisee's business. Franchisees should carefully review the scope of the indemnity obligations to understand the potential liabilities they are assuming.