What is the maximum number of months used in the liquidated damages calculation for Bigfoot Forestry?
Bigfoot_Forestry Franchise · 2025 FDDAnswer from 2025 FDD Document
You must pay us liquidated damages if either: (a) we terminate this Agreement due to your default; or (b) you terminate this Agreement in any manner other than as permitted by §20.1 or §20.3. Liquidated damages are calculated as the product of Average Monthly Fees multiplied by the lesser of (a) 24 or (b) the total number of full months remaining under the Term as of the termination effective date. "Average Monthly Fees" means the combined average monthly royalty fee and brand fund fee (without regard to any fee waivers or other reductions, and regardless of collection) imposed by this Agreement during the 12-month period preceding the termination date (or during the period of time you operated the Business if less than 12 months).
Source: Item 23 — RECEIPT (FDD pages 42–162)
What This Means (2025 FDD)
According to the 2025 Bigfoot Forestry FDD, liquidated damages are calculated if the agreement is terminated due to the franchisee's default or if the franchisee terminates the agreement in a manner not permitted. The liquidated damages are determined by multiplying the Average Monthly Fees by the lesser of 24 or the total number of full months remaining under the term as of the termination date.
"Average Monthly Fees" is defined as the combined average monthly royalty fee and brand fund fee during the 12-month period preceding the termination date, or during the period the business operated if less than 12 months. This means that if a franchisee breaches the agreement, Bigfoot Forestry will calculate damages based on the remaining term of the franchise agreement, but will not exceed 24 months.
This clause is designed to compensate Bigfoot Forestry for the anticipated future revenue it would have received from the franchisee had the agreement not been terminated early. The inclusion of a liquidated damages clause is a common practice in franchising to provide a predictable remedy for early termination, avoiding potentially complex and costly litigation to determine actual damages. However, the franchisee should be aware that these damages are in addition to any fees or amounts already owed to Bigfoot Forestry prior to termination.