Is the liquidated damages payment for undeveloped Basecamp Fitness studios in addition to the Development Fee?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
and void and shall revert to us. You will not be entitled to any refund of any fees.
- B. You and your affiliates must within five (5) business days of the termination or expiration pay all sums owing to us and our affiliates. In addition, you agree to pay as fair and reasonable liquidated damages (but not as a penalty) an amount equal to Ten Thousand Dollars ($10,000) for each undeveloped Basecamp Studio. You agree that this amount is in addition to the Development Fee paid under this Agreement, and is for lost revenues from Royalty Fees (as defined in the Franchise Agreement) and other amounts payable to us, including the fact that you were holding the development rights for those Basecamp Studios and precluding the development of certain Basecamp Fitness studios in the Development Territory, and that it would be difficult to calculate with certaint
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 51–55)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, the liquidated damages payment for undeveloped studios is indeed in addition to the Development Fee. Specifically, if a Basecamp Fitness development agreement is terminated, the developer must pay $10,000 for each studio that was not developed.
This payment is explicitly stated to be separate from the Development Fee, which is nonrefundable. The purpose of this liquidated damages clause is to compensate Basecamp Fitness for lost revenues from royalty fees and other amounts, as well as for the fact that the developer was holding the development rights for those studios, preventing Basecamp Fitness from developing them in the territory.
However, the FDD also notes that if a court determines that this liquidated damages payment is unenforceable, Basecamp Fitness may pursue other available remedies, including consequential damages. This means that while the agreement specifies a fixed amount, the actual amount owed could potentially be higher or subject to legal challenges.