When are provisions requiring Stretch Zone franchisees to waive exemplary, punitive, or similar damages considered void?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Waiver of Exemplary & Punitive Damages. RCW 19.100.190 permits franchisees to seek treble damages under certain circumstances.
Accordingly, provisions contained in the franchise agreement or elsewhere requiring franchisees to waive exemplary, punitive, or similar damages are void, except when 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).
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 Stretch Zone's 2025 Franchise Disclosure Document, provisions that require franchisees to waive exemplary, punitive, or similar damages are generally considered void in Washington state. This is based on RCW 19.100.190, which permits franchisees to seek treble damages under certain conditions.
However, there is an exception to this rule. Such waiver provisions are not void if they are executed as part of a negotiated settlement after the franchise agreement is already in effect. In this case, the waiver is permissible only if both parties, Stretch Zone and the franchisee, are represented by independent legal counsel, in accordance with RCW 19.100.220(2).
This means that while Stretch Zone cannot initially require franchisees to waive their rights to seek exemplary or punitive damages, a franchisee can agree to such a waiver later on if they are involved in a settlement and have their own lawyer advising them. This protects the franchisee's right to seek certain damages while allowing for flexibility in resolving disputes through negotiated settlements.