In the event of a dispute, what is the limit of recovery for the Diesel Barbershop Developer?
Diesel_Barbershop Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.16 Waiver of Punitive Damages.
Developer hereby waives to the fullest extent permitted by law, any right to or claim for any punitive, exemplary, incidental, indirect, special or consequential damages (including, without limitation, lost profits) against Franchisor or its Affiliate arising out of any cause whatsoever (whether such cause be based in contract, negligence, strict liability, other tort or otherwise) and agrees that in the event of a dispute, that Developer and Guarantor's recovery is limited to actual damages.
If any other term of this Agreement is found or determined to be unconscionable or unenforceable for any reason, the foregoing provisions will continue in full force and effect, including, without limitation, the waiver of any
right to claim any consequential damages. Nothing in this Section or any other provision of this Agreement will be construed to prevent Franchisor or its Affiliate from claiming and obtaining expectation or consequential damages, for the balance of the term of this Agreement if it is terminated due to Developer's default, which the Parties agree and acknowledge Franchisor may claim under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 62–252)
What This Means (2025 FDD)
According to the 2025 Diesel Barbershop Franchise Disclosure Document, the Developer's recovery in the event of a dispute with Diesel Barbershop is limited to actual damages. The Developer waives the right to claim punitive, exemplary, incidental, indirect, special, or consequential damages, including lost profits. This waiver applies to any cause of action, whether based in contract, negligence, strict liability, tort, or otherwise.
This means that a Diesel Barbershop Developer can only recover direct financial losses that can be proven and attributed to the franchisor's actions. The Developer cannot seek additional compensation for things like emotional distress, lost business opportunities, or other indirect losses. This limitation of liability is a significant factor for prospective Developers to consider, as it restricts their potential financial recourse in case of a dispute.
However, the FDD specifies that this waiver does not prevent Diesel Barbershop from claiming expectation or consequential damages from the Developer if the Development Agreement is terminated due to the Developer's default. This creates an imbalance where the franchisor retains the right to seek a broader range of damages while the Developer's recovery is limited to actual damages. This is a fairly common practice in franchising, where the franchisor seeks to protect its brand and system standards.
Furthermore, the document states that if any other term of the agreement is found to be unconscionable or unenforceable, the waiver of consequential damages will remain in effect. This reinforces the franchisor's intention to limit the Developer's potential recovery, even if other parts of the agreement are challenged. Prospective Developers should carefully consider this limitation and seek legal counsel to understand its implications fully.