Under what circumstances can an Afuri Ramen Dumpling franchisee terminate the franchise agreement?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
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. Such payment will be calculated based on the average Royalty Fees you paid (or if unpaid, payable) during the 12 months immediately preceding the termination date (or shorter period if you will have operated for less than 12 months). The parties hereby acknowledge and agree that the actual damages that would be incurred by Afuri in the event of any breach or early termination of this Agreement by Franchisee would be difficult to calculate and that the liquidated damages provided for in this Agreement are fair and reasonable under the circumstances. The parties further acknowledge and agree that the liquidated damages specified in this Section are only intended to compensate Afuri for the early termination of this Agreement and Afuri's loss of royalty revenue resulting therefrom, but not for any other breach of this Agreement by Franchisee or any other damages incurred by Afuri, and all remedies applicable thereto remain available to Afuri.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
Based on the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, the document mentions that a franchisee may terminate the agreement in accordance with Section 6.2. However, it does not specify the circumstances under which the franchisee can terminate the agreement under this section. If the franchisee terminates the agreement outside of the terms listed in Section 6.2, the franchisee will be responsible for paying Afuri Ramen Dumpling liquidated damages.
The liquidated damages are calculated based on the royalty fees the franchisee should have paid for either 24 months or the remaining term of the agreement, whichever is less. This calculation is based on the average royalty fees paid (or payable) during the 12 months before termination, or a shorter period if the restaurant has been operating for less than 12 months.
Prospective franchisees should carefully review Section 6.2 of the franchise agreement to fully understand their termination rights and obligations. It is important to understand the conditions under which you can terminate the agreement without incurring significant financial penalties. You should consult with a legal professional to fully understand the implications of these terms before signing the agreement.