In the event of a dispute, what is the limit to the recovery of damages for a Fly Fitness franchisee and each principal?

According to Fly Fitness's 2024 Franchise Disclosure Document, in the event of a dispute, a franchisee and each principal are limited to the recovery of any actual damages sustained. They waive any right to or claim for any punitive, exemplary, incidental, indirect, special, consequential or other damages (including, without limitation, loss of profits) against Fly Fitness, its affiliates, and their respective officers, directors, shareholders, partners, agents, representatives, independent contractors, servants and employees, in their corporate and individual capacities, arising out of any cause whatsoever, to the fullest extent permitted by law.

This waiver of certain damages means that if a Fly Fitness franchisee or its principal sues Fly Fitness and wins, they can only recover the direct financial losses they actually suffered. They cannot claim additional damages intended to punish Fly Fitness (punitive), compensate for emotional distress (incidental), or cover potential future profits (consequential). This limitation is a significant factor for prospective franchisees to consider, as it restricts their potential financial recovery in case of a dispute with the franchisor.

This type of clause is relatively common in franchise agreements. It aims to protect the franchisor from large, unpredictable damage awards. However, franchisees should be aware of this limitation and carefully assess the potential risks and benefits of entering into the franchise agreement, understanding that their ability to recover damages is limited to actual losses only.