How is the pre-opening damage fee calculated for an Americas Best Value Inn franchise?
Americas_Best_Value_Inn Franchise · 2025 FDDAnswer from 2025 FDD Document
ion to, not in lieu of, your obligations to pay other amounts due to us under this Agreement up through the date of termination, including payments due under annual or multi-year commitments (whether incurred by you directly or by us on your behalf) and any unpaid start-up or connectivity fees, and to strictly comply with your post termination obligations. The legal remedies under this Agreement will not preclude us from equitable remedies to which we may be entitled under applicable law.
- (c) Pre-Opening Damages. If you breach this Agreement and we terminate this Agreement, before the Opening Date, the parties agree that it would be difficult if not impossible to
Source: Item 23 — RECEIPTS (FDD pages 71–223)
What This Means (2025 FDD)
According to the 2025 Americas Best Value Inn Franchise Disclosure Document, if the franchise agreement is terminated by Americas Best Value Inn due to a franchisee breach before the hotel's opening date, the franchisee must pay a pre-opening damage fee. This fee is calculated as $1,000 for each guest room in the hotel.
Americas Best Value Inn specifies that determining the exact amount of damages from the loss of future revenue would be difficult to calculate. Therefore, the pre-opening damage fee serves as a reasonable estimate of the losses Americas Best Value Inn would incur due to the interrupted revenue stream.
This pre-opening damage clause highlights a significant financial risk for prospective Americas Best Value Inn franchisees. If a franchisee fails to meet their obligations and the agreement is terminated before the hotel opens, they will be required to pay a substantial fee based on the number of guest rooms, regardless of the actual damages incurred by the franchisor. Franchisees should carefully consider this potential liability and ensure they have sufficient resources and a solid plan to meet all obligations outlined in the franchise agreement to avoid such a penalty.