What happens if I terminate the Big Blue Swim School agreement without cause?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
be bound by the non-solicitation covenant contained in Section 20.E for one (1) year beginning on the closing date.
You may not under any circumstances sell any of the School's assets until we have exercised or elected not to exercise our right to purchase those assets, as provided in this Section.
20.H. Liquidated Damages
If we terminate this Agreement for cause under Section 19.B, or if you terminate this Agreement without cause, before the Term's scheduled expiration date, you acknowledge and confirm that we will suffer substantial damages as a result of such termination, including Brand Damages. "Brand Damages" means lost Royalties, lost Brand Fund Contributions, lost market penetration and goodwill, loss of BIG BLUE Swim School representation in the School's market area, customer confusion, lost opportunity costs, and expenses that we will incur in developing or finding another franchisee to develop another BIG BLUE Swim School in the School's market area. We and you acknowledge that Brand Damages are difficult to estimate accurately, and proof of Brand Damages would be burdensome and costly, although such damages are real and meaningful to us. Therefore, upon termination of this Agreement, as provided above, before the Term's scheduled expiration date, you agree to pay us in a lump sum, within the timeframe we specify, liquidated damages equal to the product of either twenty-four (24) or the number of months that would have remained in the Term (as of the effective date of termination) had it not been terminated, whichever is shorter, multiplied by the average monthly Royalties and Brand Fund contributions that were due and payable to us during the twelve (12) months before the month of termination (or for such lesser period that the School has been open, if less than twelve (12) months).
You agree that the liquidated damages calculated under this Section 20.H represent the best estimate of our Brand Damages arising from any termination of this Agreement before the Term expires. Your payment of the liquidated damages to us will not be considered a penalty but, rather, a reasonable estimate of fair compensation to us for the Brand Damages we will incur because this Agreement did not continue for the Term's full length. You acknowledge that your payment of liquidated damages is full compensation to us only for the Brand Damages resulting from the early termination of this Agreement and is in addition to, and not in lieu of, your obligations to pay other amounts due to us under this Agreement as of the effective date of termination and to comply strictly with the de-identification procedures of Section 20.B and your other post-termination obligations. If any valid law or regulation governing this Agreement limits your obligation to pay, and/or our right to receive, the liquidated damages for which you are obligated under this Section, then you will be liable to us for any and all Brand Damages we incur, now or in the future, as a result of your breach of this Agreement.
20.I. Continuing Obligations
All of our and your (and your owners') obligations expressly surviving expiration or termination of this Agreement will continue in full force and effect after and notwithstanding its expiration or termination and until they are satisfied in full.
21. Relationship of the Parties; Indemnification
21.A. Independent Contractors
This Agreement does not create a fiduciary relationship between you and us (or any affiliate of ours). You have no authority, express or implied, to act as an agent for us or our affiliates for any purpose. You are, and will remain, an independent contractor responsible for all obligations and liabilities of, and for all losses or damages to, the School and its assets, including any personal property, equipment, fixtures, or real property, and for all claims or demands based on damage to or destruction of property or based on injury, illness, or death of any person resulting directly or indirectly from the School's operation.
We and you are entering this Agreement with the intent and expectation that we and you are and will be independent contractors.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Big Blue Swim School Franchise Disclosure Document, if a franchisee terminates the agreement without cause before the scheduled expiration date, they acknowledge that Big Blue Swim School will suffer substantial damages, including Brand Damages. Brand Damages include lost Royalties, lost Brand Fund Contributions, lost market penetration and goodwill, loss of Big Blue Swim School representation in the School's market area, customer confusion, lost opportunity costs, and expenses that Big Blue Swim School will incur in developing or finding another franchisee to develop another Big Blue Swim School in the School's market area.
Because these Brand Damages are difficult to estimate accurately, the franchisee agrees to pay Big Blue Swim School liquidated damages. These damages will be a lump sum equal to the product of either 24 or the number of months that would have remained in the Term, whichever is shorter, multiplied by the average monthly Royalties and Brand Fund contributions that were due and payable to Big Blue Swim School during the 12 months before the month of termination, or for such lesser period that the School has been open, if less than 12 months.
Additionally, upon the franchisee's termination of the Agreement without cause, the franchisee and their owners agree not to solicit any of Big Blue Swim School's or their affiliates' employees to discontinue their employment with them for at least one year after the effective date of termination. They also agree to a covenant not to compete, preventing them from having any interest in a Competitive Business within ten miles of the School's site or another Big Blue Swim School. The franchisee must also de-identify the School, cease using Big Blue Swim School's Confidential Information, and allow Big Blue Swim School to notify customers of the change.