When are Lost Profits due to 360 Painting?

According to 360 Painting's 2025 Franchise Disclosure Document, lost profits are due upon demand. Specifically, 360 Painting is entitled to lost profits if a franchisee is terminated for cause or fails to operate the business for the entire term of the Franchise Agreement. The amount of lost profits is defined as the royalties, marketing fund payments, and other fees that the franchisee would have paid had they operated the business for the full duration of the Franchise Agreement.

This means that if a 360 Painting franchisee breaches the agreement and is terminated, or voluntarily ceases operations before the agreement's expiration, they could be liable for the future royalties and marketing fund contributions they would have otherwise paid. This can represent a significant financial burden, potentially encompassing several years' worth of payments.

Prospective franchisees should carefully consider this clause and its potential financial implications. It is important to fully understand the circumstances under which termination for cause may occur, and to assess the long-term viability of the 360 Painting franchise in their specific market. Understanding the full term of the franchise agreement and estimating potential gross sales is crucial to assess the potential lost profits liability. Franchisees should seek legal counsel to fully understand their obligations and potential risks associated with this clause.