Does the Hardees franchise agreement allow for consequential, punitive, or exemplary damages in disputes between Hardees and the Developer?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. Developer and HR waive, to the fullest extent permitted by law, any right or claim of any consequential, punitive or exemplary damages against each other and agree that, in the event of a dispute between them, each shall be limited to the recovery of actual damages sustained by it. Developer and HR waive, to the fullest extent permitted by law, the right to bring, or be a class member in, any class action suits and the right to trial by jury.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the franchise agreement explicitly addresses the matter of damages in disputes. Specifically, both Hardees and the Developer waive the right to claim consequential, punitive, or exemplary damages against each other. This means that in the event of a dispute, both parties are limited to recovering only the actual damages they have sustained. This mutual waiver is intended to limit the financial exposure of both parties in case of legal disagreements.
This clause has significant implications for a prospective Hardees developer. It means that if Hardees breaches the agreement, the developer's potential recovery is capped at the actual financial losses directly resulting from the breach. The developer cannot seek additional damages intended to punish Hardees or to compensate for indirect losses. Similarly, Hardees is limited in its ability to recover more than its direct damages from the developer.
Furthermore, the agreement stipulates that both parties waive the right to participate in class action lawsuits and the right to a jury trial. This further restricts the avenues available for dispute resolution and potentially reduces the costs associated with litigation. However, it also means that a developer cannot join forces with other franchisees to pursue a collective claim against Hardees, and must instead pursue any claims individually. This type of clause is relatively common in franchise agreements, as franchisors often seek to limit their exposure to large damage awards and complex litigation.