When are provisions requiring Ledgers franchisees to waive exemplary damages void?

According to Ledgers' 2025 Franchise Disclosure Document, provisions in the franchise agreement that require franchisees to waive exemplary, punitive, or similar damages are generally void. However, there is an exception to this rule. Such waivers are permissible and enforceable if they are part of a negotiated settlement reached after the franchise agreement is already in effect. Furthermore, for the waiver to be valid, both Ledgers and the franchisee must be represented by independent legal counsel during these settlement negotiations. This exception is in accordance with Washington state law, specifically RCW 19.100.220(2).

This means that Ledgers franchisees initially cannot waive their right to seek exemplary or punitive damages. This protection is in place to ensure that franchisees are not pressured into giving up important legal rights at the outset of the franchise relationship. However, if a dispute arises later, and both parties agree to a settlement with the advice of their own lawyers, a waiver of such damages can be included as part of that settlement.

This provision is particularly relevant in the context of franchise law, where power imbalances may exist between the franchisor and franchisee. By ensuring franchisees have independent counsel and that waivers are only executed in the context of a negotiated settlement, the law aims to protect franchisees from potentially unfair or coercive practices. Prospective Ledgers franchisees should understand this protection and ensure they seek independent legal advice before agreeing to any settlement that involves waiving their rights to exemplary or punitive damages.