Are the Bang Cookies Franchisee's Owners liable for Brand Development Fund Fees after termination?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
uting a default under Article 16.A. are in addition to any and all other grounds for default as may be otherwise set forth in the Franchise Agreement. In the event of an event of default of this Agreement by Franchisee under Article 16.A. or, as otherwise set forth in this Agreement, Franchisee agrees that termination of this Agreement is not the sole or exclusive remedy of Franchisor and that Franchisor's right or remedy of termination shall be in addition to any and all other rights set forth in this Agreement, and as otherwise available to Franchisor in law or equity.
Without limitation to the foregoing, additionally, in the event of the termination of this Agreement as a result of a default or breach by Franchisee and/or, by Franchisee's Owners and/or affiliates of any Ancillary Agreements, Franchisor, in addition to any and all other rights and remedies available to Franchisor as set forth in this Agreement, and, at law and in equity, shall possess the following rights and remedies, each of which are not exclusive of the other and may be/are in conjunction with one another:
- (1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, in the event of termination due to a franchisee's breach or default, the franchisee and their owners can be held liable for outstanding fees. This includes the Brand Development Fund Fee, among other financial obligations. This liability extends to all fees that would have been paid to Bang Cookies throughout the original term of the agreement had the breach not occurred and the agreement not been terminated.
Bang Cookies specifies that in calculating these damages, it is considered fair and reasonable to use the franchisee's most recent calendar year gross sales to estimate lost revenues and fees. This calculation assumes that the same level of gross sales would have been maintained each year for the remainder of the agreement's term. This means that even after termination, Bang Cookies can pursue the franchisee and their owners for the Brand Development Fund Fees they would have been expected to contribute based on their past performance.
This provision is significant for prospective Bang Cookies franchisees as it highlights a substantial financial risk. If a franchisee defaults on the agreement, they and their owners could be responsible not only for immediate outstanding fees but also for projected future fees, potentially amounting to a considerable sum. Franchisees should carefully consider this potential liability and ensure they have a solid business plan and sufficient financial resources to meet their obligations under the franchise agreement.