Can arbitrators award punitive damages to either the Hydrodog franchisor or the franchisee?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
21. DISPUTE RESOLUTION.
- 21.1 Agreement to Arbitrate.
You and we acknowledge that resolving disputes prior to commencing arbitration hearings or court proceedings is in the best interests of both parties, all other franchisees and our System.
Therefore, the parties agree that they will seek to settle any dispute between them through good faith negotiations prior to arbitration.
However, if the parties are unable to settle the dispute or controversy, then except as expressly provided to the contrary in this Agreement, all disputes and controversies between you and we, including allegations of fraud, misrepresentation and violation of any state or federal laws, rules or regulations, arising under, as a result of, or in connection with this Agreement or the HydroDog Business are subject to and will be resolved exclusively by arbitration conducted according to the then current commercial arbitration rules of the American Arbitration Association.
- 21.2 Notice of Dispute.
The party alleging the dispute must provide the other party with written notice setting forth the alleged dispute in detail.
The party who receives written notice alleging the dispute will have thirty (30) days after receipt of the written notice to correct, settle or compromise the dispute specified in the written notice.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
Based on the 2025 Hydrodog Franchise Disclosure Document, the document does not explicitly address whether arbitrators can award punitive damages to either the franchisor or the franchisee. The FDD outlines dispute resolution processes, including arbitration, but it does not specify the scope of the arbitrator's powers regarding damages.
Item 21 details the process for dispute resolution, starting with good faith negotiations and potentially moving to arbitration under the American Arbitration Association rules. However, the document remains silent on whether these arbitrators are empowered to award punitive damages. The agreement specifies the venue for arbitration hearings and other procedural aspects, but it does not clarify the types of remedies available.
Given this lack of explicit detail, prospective Hydrodog franchisees should seek clarification from the franchisor regarding the arbitrator's authority to award punitive damages. Understanding the potential liabilities and remedies available in arbitration is crucial for making an informed investment decision. Franchisees should also consult with legal counsel to fully understand the implications of the dispute resolution process outlined in the franchise agreement.