Does Azal Coffee have the right to charge liquidated damages for certain violations of the franchise agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
pend or release you from any obligation that you owe to us or our affiliates 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, Azal Coffee has the right to charge franchisees liquidated damages for failure to comply with contractual obligations, operational standards, or procedures.
The liquidated damages policy specifies amounts for various violations. The first violation results in a $250 charge, the second in a $500 charge, and the third or more in a $1,000 charge. Additionally, franchisees may be charged $2,500 for failing to timely register and attend the annual convention, $1,000 per day for not being open and fully operational during designated hours, $500 per week for not participating in promotional programs, $1,000 for failing to attend required additional training, $100 per week for each late weekly report, and $500 for each late monthly or annual report.
The FDD states that Azal Coffee may revise the liquidated damages amounts and the violations to which they apply in the Brand Standards Manual. These damages are intended to cover administrative expenses and losses related to uniformity, quality, reputation, or goodwill within the Azal Coffee franchise system. The agreement specifies that franchisees agree that these damages are reasonable and acknowledge that actual damages for these violations are difficult to calculate.
Franchisees must pay the liquidated damages within ten days of receiving written notice, as specified in Section 4.13 of the franchise agreement. This policy ensures that Azal Coffee franchisees adhere to the brand's standards and contractual obligations, with financial penalties in place for non-compliance.