Are the Bang Cookies Franchisee's Owners liable for Royalty 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.
- (2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
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, both the franchisee and their owners can be held liable for outstanding Royalty Fees. Specifically, they can be held jointly and severally liable for all payments, fees, monetary obligations, financial obligations, interest, and charges due to Bang Cookies. This includes, but is not limited to, Royalty Fees and Advertising Contributions.
Furthermore, Bang Cookies has the right to recover lost revenues, profits, and fees, including Royalty Fees, Brand Development Fund Fees, Advertising Contributions, and all other fees and expenses that would have been paid throughout the term of the agreement had the breach not occurred and the agreement not been terminated. To calculate these damages, Bang Cookies may use the franchisee's most recent calendar year Gross Sales to estimate lost revenues and fees, assuming these sales would have continued throughout the remainder of the agreement's term.
This means that if a Bang Cookies franchise is terminated due to the franchisee's default, the franchisee and their owners could face significant financial liabilities, not only for what is immediately owed but also for projected future earnings. This provision underscores the importance of adhering to the franchise agreement and fulfilling all financial obligations to avoid potential long-term financial repercussions. Prospective franchisees should carefully consider these potential liabilities and ensure they have a solid understanding of the terms and conditions of the franchise agreement.