If a Best Brains franchisee improperly terminates the agreement, what is the liquidated damages fee?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Business premises. We have 30 days after termination or expiration of this Agreement to exercise this option.
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- Adhere to the provisions of the post-term covenants not to compete and not to solicit;
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- Abide by any other covenant in this Agreement that requires performance by you after you are no longer a franchisee; and
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- Within 30 days of termination or expiration, furnish to us satisfactory evidence of your compliance with the foregoing obligations.
- F. Option to Purchase Assets. Upon the termination or expiration of this Agreement, we have a 90 day option to purchase from you some or all of the equipment, supplies, inventory, advertising materials and any items with our Marks for cash at fair market value.
If you and we do not agree upon the amount of the fair market value, then a business appraiser selected by us shall determine the fair market value. The cost of the business appraiser shall be borne equally by us and you.
We have an unrestricted right to assign this option to a third party.
- G. Continuing Obligations. All obligations of yours which expressly or by their nature survive
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, if a franchisee terminates the agreement outside the terms outlined in Section 7.A, or if Best Brains terminates the agreement due to the franchisee's actions as per Section 7.B, the franchisee must pay Best Brains $30,000 as liquidated damages.
The FDD clarifies that this $30,000 payment is considered a fair and reasonable estimate of the actual damages Best Brains would incur due to the early termination or breach of the agreement. The document acknowledges that calculating the precise financial impact of such a breach is difficult, justifying the fixed liquidated damages amount.
It's important to note that these liquidated damages are specifically intended to compensate Best Brains for the early termination and the resulting loss of revenue. This payment does not cover any other breaches of the agreement by the franchisee or any other damages Best Brains might incur. Best Brains retains the right to pursue additional remedies for any other breaches or damages beyond the scope of the early termination itself.