Are punitive or exemplary damages allowed against Fly Fitness in an arbitration proceeding?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 10.3.3 This arbitration provision is self-executing and will remain in full force and effect after expiration or termination of this Agreement. Any arbitration will be conducted on an individual, and not a class-wide or multiple plaintiffs, basis. If either party fails to appear at any properly noticed arbitration proceeding, an award may be entered against the party by default or otherwise, notwithstanding the failure to appear. Judgment upon an arbitration award may be entered in any court having jurisdiction and will be binding, final and not subject to appeal. No punitive or exemplary damages will be awarded against Franchisor, Developer, or entities related to either of them, in an arbitration proceeding or otherwise, and are hereby waived.
Source: Item 23 — RECEIPT (FDD pages 45–182)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, franchisees are prohibited from receiving punitive or exemplary damages from Fly Fitness in an arbitration proceeding. The FDD explicitly states that "No punitive or exemplary damages will be awarded against Franchisor, Developer, or entities related to either of them, in an arbitration proceeding or otherwise, and are hereby waived."
This waiver means that if a franchisee pursues arbitration against Fly Fitness and prevails, the franchisee cannot recover damages intended to punish Fly Fitness for particularly egregious behavior. The franchisee is limited to recovering actual or compensatory damages, such as direct financial losses. This limitation applies regardless of whether the dispute is resolved through arbitration or any other legal avenue.
This type of clause is relatively common in franchise agreements, as franchisors often seek to limit their potential liability. Prospective franchisees should carefully consider the implications of waiving the right to seek punitive damages, as it could limit their potential recovery in the event of a serious dispute with Fly Fitness. Franchisees should seek legal counsel to fully understand the ramifications of this and other clauses within the franchise agreement.