What does the liquidated damages fee for improper termination of a Best Brains franchise agreement compensate?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
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, the liquidated damages fee of $30,000 is designed to compensate Best Brains for the early termination of the franchise agreement and the resulting loss of revenue. This fee is applicable if the franchisee terminates the agreement outside the terms specified in Section 7.A, or if Best Brains terminates the agreement according to Section 7.B.
The FDD emphasizes that calculating the actual damages from early termination would be difficult, so the $30,000 liquidated damages are considered a fair and reasonable estimate under the circumstances. However, these damages are specifically intended to cover the loss of revenue and the early termination itself.
It's important to note that this liquidated damages fee does not cover any other breaches of the agreement by the franchisee or any other damages incurred by Best Brains. Best Brains retains the right to pursue additional remedies for any other breaches or damages beyond the scope of the early termination compensation. This means a franchisee could potentially be liable for the $30,000 liquidated damages plus additional costs if they violate other terms of the franchise agreement.