What costs and expenses are included in the sums owed to Afuri Ramen Dumpling upon termination?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
, the parties must agree upon a purchase price and terms within 5 business days after termination of this Agreement. If not, a fair value and fair terms will be determined by appraisal as provided in section 7.6 (entitled "Appraisals").
- 6.5.7 Upon termination for any reason, you will return to us all proprietary and confidential materials, including customer lists and account information, keys, codes, signage, advertising and marketing materials, service agreements and other forms, printed files, security codes, and additional similar items and information as may be described in the Operations Manual. If you fail to return or cease use of any of these items, we may enter your business premises without being guilty of trespass or any other tort to remove and retain the items. You will pay to us, on demand, any expenses we incur in trying to remove or collect such items or in attempting to have you cease use of them.
- 6.5.8 Damages and Liquidated Damages. Upon termination pursuant to any default by Franchisee, Franchisee agrees to pay Afuri all actual and consequential damages and any costs and expenses (including reasonable attorneys' fees) incurred by Afuri as a result of such default and termination. Franchisee acknowledges and agrees that it does not have the right to terminate this Agreement, except as provided in Section 6.2, or as otherwise agreed in writing by the parties, and that any termination of this Agreement by Franchisee that is not in accordance with the terms of Section 6.2, or any termination of this Agreement by Afuri in accordance with its terms, may result in lost future revenue and profits to Afuri, harm to the goodwill associated with the Licensed Marks, and increased costs to Afuri to re-develop or re-franchise the market in which the Franchised Operation is located.
Accordingly, in the event that Franchisee terminates this Agreement other than in accordance with the terms of Section 6.2, or if Afuri terminates this Agreement pursuant to its terms, then Franchisee shall pay to Afuri within thirty (30) days of such termination as liquidated damages (and not as a penalty), an amount equal to the Royalty Fees you should have paid had this Agreement not been terminated, for the lesser of (1) 24 months, or (2) the number of months remaining on the term of this Agreement.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, upon termination of the franchise agreement due to franchisee default, the franchisee is responsible for paying Afuri Ramen Dumpling all actual and consequential damages, as well as any costs and expenses, including reasonable attorneys' fees, that Afuri incurs as a result of the default and termination. This means that if a franchisee breaches the franchise agreement and Afuri Ramen Dumpling terminates the agreement, the franchisee will have to compensate Afuri for any financial losses they suffer as a result.
Additionally, the franchisee must return all proprietary and confidential materials to Afuri Ramen Dumpling, including customer lists, account information, keys, codes, signage, advertising and marketing materials, service agreements, and other forms, printed files, and security codes. If the franchisee fails to return these items or continues to use them, Afuri Ramen Dumpling has the right to enter the business premises to remove and retain these items. The franchisee will be responsible for paying Afuri Ramen Dumpling for any expenses incurred in removing or collecting these items or in attempting to stop the franchisee from using them.
Furthermore, the franchisee may be required to sell equipment and inventory to Afuri Ramen Dumpling. Equipment and furnishings will be purchased at fair market value, while inventory will be purchased at the franchisee's invoice cost, less a 10% restocking charge. However, Afuri Ramen Dumpling will not be liable for payment for intangibles, including goodwill. The franchisee may also be required to sell their interest in the franchise, the franchise premises, and all related equipment, fixtures, signs, real estate leases, equipment leases, and personal property to Afuri Ramen Dumpling. If Afuri Ramen Dumpling exercises this right, the parties must agree on a purchase price and terms within 5 business days after termination. If they cannot agree, a fair value and fair terms will be determined by appraisal.