What happens if a Beggars Pizza franchisee fails to pay the Brand Fund fee?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.7 Payment.
Franchisee must promptly pay all sums owing to Franchisor and its affiliates.
If termination for any default of Franchisee occurs, such sums will include all damages, costs, and expenses including, without limitation, reasonable attorneys' fees incurred by Franchisor as a result of the default, which obligation will give rise to and remain, until paid-infull, a lien in favor of Franchisor against any of the personal property, furnishings, equipment, signs, fixtures, and inventory owned by Franchisee at the time of default.
- 16.8 Liquidated Damages.
If the Agreement is terminated prior to the end of its term due to Franchisee's default, in addition to the amounts set forth in Section 16.7, Franchisee must promptly pay to Franchisor a lump sum payment as damages and not as a penalty for breaching the Agreement in an amount equal to (a) the average monthly continuing royalty fee and Brand Fund fee payable by Franchisee under Section 4.3 and Section 12.4 over the twelve (12)-month period immediately preceding the date of termination (or such shorter time period if the Restaurant has been open less than twelve (12) months) (b) multiplied by the lesser of (i) thirty-six (36) months, or (ii) the number of months then remaining in the then-current term of the Agreement.
Franchisee acknowledges that a precise calculation of the full extent of the damages Franchisor will incur if termination of the Agreement occurs as a result of Franchisee's default is difficult to determine and that this lump sum payment is reasonable in light of the damages Franchisor will incur for Franchisee's premature termination of the Agreement.
This lump sum payment will be in lieu of any damages Franchisor may incur as a result of Franchisee's default, but it will be in addition to all amounts provided in Section 16.7 and any attorneys' fees and other costs and
expenses to which Franchisor is entitled under the terms of the Agreement including, without limitation, Section 25.8. Franchisee's payment of this lump sum will not affect Franchisor's right to obtain appropriate injunctive relief and remedies to enforce this Section 16 and the covenants set forth in Section 10 and Section 17.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Beggars Pizza Franchise Disclosure Document, if a franchisee defaults on their agreement, which would include failing to pay the Brand Fund fee, they are liable for damages, costs, and expenses, including reasonable attorney's fees, incurred by Beggars Pizza as a result of the default. This obligation creates a lien in favor of Beggars Pizza against the franchisee's personal property, furnishings, equipment, signs, fixtures, and inventory. This lien remains until the debt is paid in full.
In addition to the above, if the Franchise Agreement is terminated early due to the franchisee's default, the franchisee must promptly pay Beggars Pizza a lump sum as damages, not as a penalty. This amount is calculated by multiplying (a) the average monthly continuing royalty fee and Brand Fund fee payable by the franchisee over the 12 months preceding termination (or a shorter period if the restaurant has been open for less than 12 months) by (b) the lesser of 36 months or the number of months remaining in the agreement's term.
Beggars Pizza states that this lump sum payment is considered a reasonable estimate of the damages they will incur due to the franchisee's premature termination and is in addition to all other amounts owed, including attorney's fees and costs. However, the payment of this lump sum does not affect Beggars Pizza's right to seek injunctive relief and other remedies to enforce the agreement's terms.