How are the liquidated damages calculated if Baya Bar terminates my Franchise Agreement for cause?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
If we terminate your Franchise Agreement for cause, you must pay us within 15 days after the effective date of termination liquidated damages equal to the average monthly royalty fees you paid or owed to us during the 12 months of operation preceding the effective date of termination multiplied by (a) 24 (being the number of months in two full years), or (b) the number of months remaining in the Agreement had it not been terminated, whichever is lower.
Source: Item 6 — OTHER FEES (FDD pages 11–16)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if Baya Bar terminates your Franchise Agreement for cause, you will be required to pay liquidated damages. These damages are calculated based on your average monthly royalty fees over the 12 months preceding the termination date.
The liquidated damages will be equal to the average monthly royalty fees multiplied by a factor. This factor is either 24 (representing two full years) or the number of months remaining in the agreement had it not been terminated, whichever is lower.
For a prospective Baya Bar franchisee, this means that if Baya Bar terminates the agreement due to a breach on your part, you could owe a significant sum. The amount depends on how well your Baya Bar location has been performing in terms of royalty fees and how much time is left on your franchise agreement. It is important to understand the conditions under which Baya Bar can terminate the agreement for cause and to ensure compliance to avoid such a situation.