Are punitive damages allowed in arbitration proceedings related to Marble Slab Creamery?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
- Item 17, "Renewal, Termination, Transfer and Dispute Resolution," shall be amended by the addition of the following paragraphs:
The Securities Commissioner has held the following to be unfair, unjust or inequitable to North Dakota franchisees (Section 51-19-09, N.D.C.C.):
- g. Waiver of Exemplary & Punitive Damages: Requiring North Dakota franchisees to consent to a waiver of exemplary and punitive damages.
Source: Item 23 — RECEIPT (FDD pages 101–346)
What This Means (2025 FDD)
According to the 2025 Marble Slab Creamery FDD, the ability to waive exemplary and punitive damages in arbitration depends on the state where the franchise is located. Specifically, in North Dakota, the Securities Commissioner considers it unfair, unjust, or inequitable for Marble Slab Creamery to require franchisees to consent to a waiver of exemplary and punitive damages. This means that Marble Slab Creamery franchisees in North Dakota may have the right to seek exemplary and punitive damages in arbitration, regardless of what the standard franchise agreement might state.
However, the FDD also indicates that this protection is specific to North Dakota. The standard Marble Slab Creamery franchise agreement might include clauses that require franchisees to waive their right to exemplary or punitive damages. But, in North Dakota, such clauses would likely be unenforceable due to state regulations designed to protect franchisees.
For prospective Marble Slab Creamery franchisees, this highlights the importance of understanding the specific franchise laws in their state. While the franchise agreement might contain certain terms, state laws can override those terms to provide additional protections. Franchisees should consult with an attorney to understand their rights and how they may vary based on their location.