Does Bang Cookies consider the lost revenue calculation a form of liquidated damages?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Shop Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated.
Franchisee agrees that the foregoing is a form of liquidated damages, and that it is fair and reasonable.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, the brand considers the calculation of lost revenues and fees resulting from early termination of the franchise agreement as a form of liquidated damages. This calculation is applied if the franchised business has been open for less than one calendar year.
In such cases, Bang Cookies will use the average of Shop Gross Sales across the entire system during the year in which the agreement was terminated. This average Gross Sales figure is then used to project the revenues and fees that Bang Cookies would have earned each year throughout the remainder of the original term of the franchise agreement, had the termination not occurred.
By agreeing to this clause, a Bang Cookies franchisee acknowledges that this method of calculating lost revenues is fair and reasonable. This is a crucial point for prospective franchisees to understand, as it commits them to a specific financial calculation in the event of early termination, potentially resulting in significant financial obligations to Bang Cookies.