What is the maximum amount of liquidated damages that Apricot Lane can charge?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks* |
|---|---|---|---|
| Liquidated Damages | Varies based on unexpired term of your franchise agreement. Maximum is amount equal to prior 36 months of Royalty payments. | Upon your premature termination or discontinuance of operation as our franchisee. | Only payable if you terminate or discontinue operation before the term expires as provided in Section 20.L of the Franchise Agreement |
Source: Item 6 — OTHER FEES (FDD pages 11–14)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, the maximum liquidated damages that Apricot Lane can charge a franchisee is tied to the unexpired term of the franchise agreement. Specifically, the maximum amount is equal to the sum of the prior 36 months of royalty payments. This fee is only payable if the franchisee terminates the agreement or discontinues operations before the end of the franchise term, as detailed in Section 20.L of the Franchise Agreement.
To calculate the potential liquidated damages, a franchisee would need to know their gross revenues over the past 36 months, as royalty payments are 5.5% of gross revenues. For example, if a franchisee's average gross revenue was $50,000 per month, their semi-monthly royalty payment would be $2,750 (5.5% of $50,000), and their total royalty payments for 36 months would be $99,000. This would be the maximum liquidated damages charged.
This type of liquidated damages clause is relatively common in franchising, as it aims to compensate the franchisor for the lost future royalty payments and the costs associated with finding a replacement franchisee. However, the specific calculation method can vary significantly between franchise systems. Prospective franchisees should carefully review the termination provisions in the franchise agreement and understand the potential financial implications of early termination.