Does the Stretch Zone franchise agreement include a waiver of punitive damages claims?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
THE PARTIES WAIVE ALL RIGHT TO ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE THAT UPON A DISPUTE BETWEEN THEM, EACH IS LIMITED TO THE RECOVERY OF ACTUAL DAMAGES HE, SHE OR IT SUSTAINS.
Section 17.9 WAIVER OF JURY TRIAL
THE PARTIES WAIVE THE RIGHT TO A TRIAL BY JURY OF ALL CLAIMS MADE BETWEEN THEM WHETHER EXISTING NOW OR IN THE FUTURE, INCLUDING ALL CLAIMS, DEFENSES, COUNTERCLAIMS, CROSS CLAIMS, THIRD PARTY CLAIMS AND INTERVENOR'S CLAIMS INVOLVING THE SALE, NEGOTIATION, SIGNING OR PERFORMANCE OF THE TRANSACTIONS INVOLVING THIS AGREEMENT.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone FDD, the franchise agreement includes a waiver of punitive or exemplary damages. This means that if a dispute arises between Stretch Zone and the franchisee, both parties agree to waive their rights to seek punitive damages from the other. Instead, they are limited to recovering only the actual damages they sustain. This provision is outlined in Section 17.9 of the agreement, which also includes a waiver of a jury trial for all claims related to the agreement.
This waiver has significant implications for a prospective Stretch Zone franchisee. It limits the potential financial recovery in case of a dispute with the franchisor, preventing the franchisee from seeking additional damages intended to punish the franchisor for misconduct. The franchisee is restricted to recovering only direct losses, such as lost profits or investments.
However, the FDD also notes that in the state of Washington, provisions requiring franchisees to waive punitive damages are void under certain circumstances, specifically unless executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel, in accordance with RCW 19.100.220(2). This means that the enforceability of the waiver may depend on the franchisee's location and the specific circumstances of any dispute.
It is important for prospective Stretch Zone franchisees to understand the implications of this waiver and to seek legal counsel to assess their rights and potential risks before signing the franchise agreement. Franchisees should also be aware of any state-specific laws that may affect the enforceability of such waivers.