Under what circumstances is a 360 Painting franchisee required to pay Lost Profits?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Lost Profits | An amount equal to the royalties, marketing fund payments and other fees that you would have paid to us had you operated the Business for the full duration of the term of the Franchise Agreement. | Upon demand | We are entitled to our lost profits if you are terminated for cause or otherwise fail to operate the business for the entire term of the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 18–21)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, a franchisee may be required to pay lost profits under specific circumstances. The lost profits are defined as an amount equivalent to the royalties, marketing fund payments, and other fees that the franchisee would have been obligated to pay had they operated the business for the entire duration of the Franchise Agreement.
360 Painting is entitled to these lost profits if the franchisee is terminated for cause. This means if 360 Painting ends the franchise agreement due to the franchisee's actions or failures to comply with the agreement, the franchisee will owe this fee.
Additionally, the lost profits fee applies if the franchisee otherwise fails to operate the business for the entire term of the Franchise Agreement. This suggests that if a franchisee voluntarily ceases operations before the agreement's expiration, they may also be liable for lost profits. This could have significant financial implications for a franchisee who, for any reason, cannot or chooses not to continue operating their 360 Painting franchise for the full term.