What is the limit of a Fitstop franchisee's recovery in the event of a dispute?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
based on alleged fraud, misrepresentation, or deceit by us, including without limitation, rescission of this Agreement, in any mediation, judicial, or other adjudicatory proceeding arising hereunder, except upon a ground expressly provided in this Agreement.
- 19.9 Waiver of Punitive Damages. You 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 us 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 your recovery is limited to actual damages.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, a franchisee's recovery in the event of a dispute is limited to actual damages. The franchisee waives, to the fullest extent permitted by law, any right to or claim for any punitive, exemplary, incidental, indirect, special, or consequential damages against Fitstop. This waiver includes, without limitation, lost profits, regardless of whether the cause is based in contract, negligence, strict liability, tort, or otherwise.
This means that if a Fitstop franchisee has a dispute with the franchisor, they can only recover the direct financial losses they have incurred. They cannot claim additional damages intended to punish Fitstop or to compensate for indirect losses like reputational damage or lost business opportunities. This limitation applies to any dispute arising from the franchise agreement, regardless of the legal basis for the claim.
However, this limitation does not prevent Fitstop from claiming and obtaining expectation or consequential damages, including lost future royalties, if the franchise agreement is terminated due to the franchisee's default. This creates an imbalance where Fitstop can pursue a broader range of damages against the franchisee, but the franchisee's recovery is restricted to actual damages. This is a significant point for potential franchisees to consider, as it limits their potential compensation in case of a dispute with Fitstop.
It is important for prospective Fitstop franchisees to understand this waiver and its implications fully. They should seek legal counsel to assess the potential risks and benefits of this provision before entering into the franchise agreement. Understanding the limitations on recovery can help franchisees make informed decisions about dispute resolution strategies and risk management.