Does the waiver of punitive damages by a Fitstop franchisee apply to all causes of action?
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 waives their right to claim punitive damages against Fitstop. This waiver applies to any cause of action, regardless of whether it arises from contract, negligence, strict liability, tort, or other grounds. The franchisee's recovery in any dispute is limited to actual damages.
This waiver means that a Fitstop franchisee cannot seek punitive, exemplary, incidental, indirect, special, or consequential damages, including lost profits, from Fitstop, even if Fitstop is found liable for wrongdoing. The franchisee is limited to recovering only the direct financial losses they have suffered.
However, this limitation applies only to the franchisee. Fitstop retains the right to claim expectation or consequential damages, including lost future royalties, if the Franchise Agreement is terminated due to the franchisee's default. This creates an asymmetry in potential liabilities between Fitstop and its franchisees.
This type of waiver is relatively common in franchise agreements. Prospective Fitstop franchisees should carefully consider the implications of this waiver, as it significantly limits their potential recovery in case of a dispute with Fitstop.