What is the maximum number of weeks used to calculate liquidated damages for a Better Blend franchise?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
- 14.5 Liquidated Damages. If BBF terminates this Agreement based upon Franchisee's default (or if Franchisee purports to terminate this Agreement except as permitted under Section 14.1), then within 10 days thereafter Franchisee shall pay to BBF a lump sum (as liquidated damages and not as a penalty) calculated as follows: (x) the average weekly Royalty Fees and Marketing Fund Contributions that Franchisee owed to BBF under this Agreement for the last 52 full weeks that Franchisee operated the Business (disregarding any fee waivers or reductions granted to Franchisee); multiplied by (y) the lesser of (1) 104 or (2) the number of weeks remaining in the then-current term of this Agreement.
If Franchisee had not operated the Business for at least 52 full weeks, then (x) will equal the average weekly Royalty Fees and Marketing Fund Contributions that Franchisee owed to BBF during the full weeks that Franchisee operated the Business.
The "average Royalty Fees and Marketing Fund Contributions that Franchisee owed to BBF" shall be based on the obligations stated in Article 4 and shall not be discounted or adjusted due to any deferred or reduced Royalty Fees and Marketing Fund Contributions agreed to by BBF unless this Section 14.5 is specifically amended.
Franchisee acknowledges that a precise calculation of the full extent of BBF's damages under these circumstances is difficult to determine and the method of calculation of such damages as set forth in this Section is reasonable.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, the maximum number of weeks used to calculate liquidated damages is 104. The liquidated damages calculation is used if Better Blend terminates the Franchise Agreement due to the franchisee's default, or if the franchisee attempts to terminate the agreement without proper cause.
The liquidated damages are calculated as a lump sum, not as a penalty. The amount is determined by multiplying two factors: (x) the average weekly Royalty Fees and Marketing Fund Contributions that the franchisee owed to Better Blend for the last 52 full weeks of operation (disregarding any fee waivers or reductions), and (y) the lesser of 104 or the number of weeks remaining in the franchise term.
If the franchisee has not operated the business for at least 52 full weeks, the calculation uses the average weekly Royalty Fees and Marketing Fund Contributions owed during the actual weeks of operation. The agreement specifies that the average Royalty Fees and Marketing Fund Contributions are based on the obligations stated in Article 4 and are not discounted or adjusted due to any deferred or reduced fees, unless Section 14.5 is specifically amended.
Better Blend states that this method of calculating damages is reasonable because precisely determining the full extent of their damages is difficult. This liquidated damages clause provides a pre-agreed formula for compensating Better Blend in the event of a default or improper termination by the franchisee, up to a maximum of 104 weeks of fees.