In the event of a dispute between Pearce Bespoke and a franchisee, are punitive or exemplary damages recoverable?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor and Franchisee acknowledge that judgment upon an arbitration award may be entered in any court of competent jurisdiction and will be binding, final, and not appealable. Franchisor and Franchisee (and their respective owners and guarantors, if applicable) agree to waive, to the fullest extent permitted by law, the right to or claim for any punitive or exemplary damages against the other and agree that in the event of a dispute between them, each will be limited to the recovery of actual damages sustained by it.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, both Pearce Bespoke and its franchisees waive the right to claim punitive or exemplary damages against each other in the event of a dispute. Instead, both parties are limited to recovering only the actual damages they sustained. This agreement extends not only to Pearce Bespoke and the franchisee but also to their respective owners and guarantors, if applicable.
This waiver means that if a franchisee sues Pearce Bespoke (or vice versa) over a contract dispute, neither party can seek additional damages intended to punish the other party beyond compensating for direct losses. This is a significant limitation, as punitive damages can sometimes be substantial in cases involving gross misconduct or intentional harm. By agreeing to this clause, franchisees are accepting a potential limitation on the total amount they can recover in a dispute.
However, the agreement also specifies that Pearce Bespoke can seek injunctive relief against a franchisee for breaches of specific sections of the franchise agreement (Sections 3, 8, 9, 12, 13, 14, 17, and/or 18) or for conduct that is illegal, dishonest, or misleading to customers, or that may impair the goodwill associated with the Marks. In such cases, Pearce Bespoke can obtain a temporary, preliminary, or permanent injunction without needing to demonstrate actual damages or post a bond. This provision provides Pearce Bespoke with a strong mechanism to enforce compliance with the franchise agreement and protect its brand reputation.