What is the liquidated damages amount for the third or more 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, the liquidated damages are $250. For the second violation, the amount is $500. For the third or more violation, Azal Coffee may charge $1,000.
Azal Coffee specifies that these liquidated damages are intended to cover the damages suffered as a result of a franchisee's violations. These damages include additional administrative expenses and damages arising from loss of uniformity, quality, reputation, or goodwill in the Franchise Systems. The FDD states that Azal Coffee believes the imposition of the liquidated damages is reasonable, as the actual damages that would be sustained for the designated violations are incapable of calculation at the time of execution of the Franchise Agreement, and the liquidated damages amounts are a reasonable estimation of those damages.
The franchisee must pay the liquidated damages within ten (10) days of Azal Coffee's written notice. The liquidated damages amounts and the violations to which they apply may be specified or revised by Azal Coffee in the Brand Standards Manual. Prospective franchisees should carefully review the Brand Standards Manual to understand the full scope of potential violations and associated liquidated damages.