To whom must an All States M.E.D. franchisee pay sums owing after termination?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
- (d) pay all sums owing to Franchisor and any Affiliate. In the event of termination for any default of Franchisee, such sums shall include, but not be limited to, all damages, costs, and expenses, including reasonable attorneys' fees, with respect to litigation, arbitration, appellate, or bankruptcy proceedings, unpaid Royalty Fees, loss of future Royalty Fee payments incurred by Franchisor as a result of any early termination of this Agreement, and any other amounts due to Franchisor or any Affiliate;
- (e) pay to Franchisor all costs and expenses, including reasonable attorneys' fees, incurred by Franchisor subsequent to the termination or expiration of the Franchise in obtaining injunctive or other relief for the enforcement of any provisions of this Agreement;
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, upon termination of the franchise agreement, a franchisee is required to pay all outstanding sums to both All States M.E.D. Franchising, LLC (the Franchisor) and any of its affiliates. This includes not only unpaid royalty fees but also any damages, costs, and expenses incurred by All States M.E.D., such as reasonable attorney's fees related to litigation, arbitration, or bankruptcy proceedings.
Furthermore, if the termination occurs due to a default by the franchisee, the franchisee may also be liable for the loss of future royalty fee payments that All States M.E.D. would have received had the agreement not been terminated early. This provision highlights the potential financial risks associated with defaulting on the franchise agreement, as the franchisee could be responsible for covering All States M.E.D.'s anticipated future earnings.
In addition to monetary obligations, the franchisee is also responsible for covering all costs and expenses, including attorney's fees, that All States M.E.D. incurs after the termination while trying to enforce any provisions of the franchise agreement. This could include seeking injunctive relief to prevent the franchisee from violating non-compete clauses or misusing confidential information. Therefore, it is crucial for prospective franchisees to understand the full scope of their financial responsibilities upon termination, which extend beyond simply paying outstanding fees.