In a dispute, is a Spray Net franchisee's recovery limited to actual damages?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee hereby waives to the fullest extent permitted by law, any right to or claim for any punitive, exemplary, incidental, indirect, special or
consequential damages (including, without limitation, lost profits) against Franchisor arising out of any cause whatsoever (whether such cause be based in contract, negligence, strict liability, other tort or otherwise) and agrees that in the event of a dispute, that Franchisee's recovery is limited to actual damages. If any other term of this Agreement is found or determined to be unconscionable or unenforceable for any reason, the foregoing provisions shall continue in full force and effect, including, without limitation, the waiver of any right to claim any consequential damages. Nothing in this Section or any other provision of this Agreement shall be construed to prevent Franchisor from claiming and obtaining expectation or consequential damages, including lost future royalties for the balance of the term of this Agreement if it is terminated due to Franchisee's default, which the parties agree and acknowledge Franchisor may claim under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to the 2025 Spray Net Franchise Disclosure Document, a franchisee's ability to recover damages from Spray Net in the event of a dispute is limited. Specifically, the franchisee waives the right to claim punitive, exemplary, incidental, indirect, special, or consequential damages, including lost profits. This waiver applies regardless of the legal basis for the claim, whether it's contract, negligence, strict liability, or other tort. The agreement explicitly states that the franchisee's recovery is limited to actual damages.
This limitation on damages is a significant consideration for prospective Spray Net franchisees. It means that in a dispute with the franchisor, the franchisee can only recover direct financial losses and cannot seek additional compensation for things like lost business opportunities or other indirect harm. However, this limitation does not prevent Spray Net from claiming expectation or consequential damages, including lost future royalties, if the franchise agreement is terminated due to the franchisee's default.
It's important to note that the enforceability of such waivers can vary by jurisdiction. For example, the Minnesota Addendum to the Franchise Disclosure Document indicates that certain provisions, including those related to limitations of claims, must comply with Minnesota law. Similarly, the Maryland Addendum specifies that waivers shall not apply to any liability under the Maryland Franchise Law. Therefore, prospective franchisees should carefully review the addenda applicable to their state and consult with legal counsel to understand the specific limitations and protections in their jurisdiction.
In summary, while the Spray Net franchise agreement includes a waiver of certain types of damages, limiting a franchisee's recovery to actual damages, the specific application and enforceability of this provision may be subject to state-specific franchise laws and addenda. Franchisees should be aware of these limitations and seek legal advice to fully understand their rights and potential remedies in case of a dispute.