Will a provision of a distribution agreement between a franchisor and franchisee that prevents a party from recovering “lost profits” be enforceable? That issue was considered in Strassle v. Bimbo Foods Bakeries Distribution, Inc., United States District Court for the District of NJ. Civil 12-3313. (RBK/AMD) (March 13, 2013).

In that case, the franchisor, of a bakery franchise signed a distribution agreement with the franchisee which stated in part “DAMAGES: notwithstanding anything to the contrary contained in this Agreement, in no event shall either party be liable to the other for any consequential, incidental, indirect, or special damages, including loss profits and punitive damages.” The issue was whether the bar for certain types of damages was enforceable.

The Court found that it was. It held that “to the extent plaintiffs seek recovery of profits which they planned to make (but for Defendants alleged breach) on the sale of individual…breads and role products to retail clients within their distribution territory the court holds that such recovery is barred under 11.12 of the parties’ distribution agreement.”

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