What is the liquidated damages amount for the first violation of contractual obligations or operational standards for an Azal Coffee franchise?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
iates under this Agreement or otherwise.
15.7 Our Right to Charge Liquidated Damages for Certain Violations.
You agree to pay us liquidated damages as a remedy for your failure to comply with contractual obligations and/or operational standards or procedures specified by us. Under our current policies, the liquidated damages are: (a) Two Hundred Fifty Dollars ($250) for the first violation; (b) Five Hundred Dollars ($500) for the second violation; and (c) One Thousand Dollars ($1,000) for the third or more violation. You must also pay us (a) Two Thousand Five Hundred Dollars ($2,500) if you fail to timely register and fully attend the annual convention; (b) One Thousand Dollars ($1,000) per day for failing to be open and fully operational during the days and business hours designated by us; (c) Five Hundred Dollars ($500) per week if you fail to participate in promotional programs; (d) One Thousand Dollars ($1,000) if you fail to attend required additional training; (e) One Hundred Dollars ($100) per week for each week a required weekly report is not timely provided to us; and (f) Five Hundred Dollars ($500) for each month that a required monthly or annual report is not timely provided to us. The liquidated damages amounts and the violations to which they apply may be specified or revised by us in the Brand Standards Manual. The liquidated damages are intended to cover our damages suffered as a result of your violations. Those damages include our additional administrative expenses and damages arising from loss of uniformity, quality, reputation, or goodwill in the Franchise Systems. You agree that the imposition of the liquidated damages is reasonable. You also acknowledge and agree that the actual damages that would be sustained by us for the designated violations are incapable of calculation at the time of execution of this Agreement and that the liquidated damages amounts specified by us are a reasonable estimation of those damages. You must pay t
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, franchisees may be subject to liquidated damages for failing to comply with contractual obligations or operational standards. For the first violation, Azal Coffee specifies a liquidated damage amount of $250.
This means that if an Azal Coffee franchisee fails to meet the standards set by the franchisor, they will be required to pay $250 for the initial infraction. Subsequent violations will result in higher penalties, with the second violation costing $500 and the third or more costing $1,000.
It's important to note that these liquidated damages are intended to cover Azal Coffee's administrative expenses and damages resulting from the loss of uniformity, quality, reputation, or goodwill within the franchise system. The FDD states that Azal Coffee may specify or revise these amounts and the violations to which they apply in the Brand Standards Manual. Franchisees are required to pay these damages within ten days of written notice from Azal Coffee.