Under what circumstances can Fat Shack franchisees seek treble damages?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as specifically permitted elsewhere in this Agreement, neither FSI or any of the FSI Affiliates, on the one side, nor Franchisee or any of the Franchisee Affiliates, on the other side, shall be liable to the other for punitive or other damages not measured by the other party's actual damages, except as may be required by statute, in any action between the parties, whether of the type subject to mandatory arbitration under Section 22.1 or otherwise, and whether such action is brought in arbitration, litigation, or any other legal proceeding.
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, the agreement generally restricts franchisees from claiming punitive damages. However, there is an exception: franchisees may be able to pursue damages not measured by actual damages, including punitive damages, if a statute requires it.
Section 22.6 of the franchise agreement states that neither Fat Shack nor the franchisee can be held liable for punitive or other damages exceeding the actual damages incurred by the other party. This limitation applies to any legal action between Fat Shack and the franchisee, regardless of whether it is subject to mandatory arbitration or brought in litigation. The key exception to this rule is if a statute mandates such damages.
In practical terms, this means that a Fat Shack franchisee's ability to seek treble damages or other punitive damages from Fat Shack is highly dependent on applicable state and federal laws. Franchisees should consult with a legal professional to understand their rights and potential remedies under relevant statutes, as the franchise agreement itself generally prohibits such claims unless legally required. This clause aims to limit Fat Shack's financial exposure in disputes with franchisees, while acknowledging that statutory requirements supersede the contractual agreement.