What is the multiplier used in the Bombs Away liquidated damages calculation?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
If Bombs Away Franchising 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 Bombs Away Franchising a lump sum (as liquidated damages and not as a penalty) calculated as follows: (x) the average Royalty Fees and Marketing Fund Contributions that Franchisee owed to Bombs Away Franchising under this Agreement for the 12-month period preceding the date on which Franchisee ceased operating the Business; multiplied by (y) the lesser of (1) 24 or (2) the number of months remaining in the then-current term of this Agreement.
If Franchisee had not operated the Business for at least 12 months, then (x) will equal the average Royalty Fees and Marketing Fund Contributions that Franchisee owed to Bombs Away Franchising during the period that Franchisee operated the Business.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the liquidated damages calculation involves multiplying two factors. The first factor is the average of the Royalty Fees and Marketing Fund Contributions that the franchisee owed to Bombs Away for the 12-month period preceding the date the franchisee ceased operating the business. If the franchisee operated the business for less than 12 months, the average is calculated based on the period they were in operation.
The second factor in the liquidated damages calculation is the lesser of two numbers: 24 or the number of months remaining in the then-current term of the Franchise Agreement. This multiplier effectively caps the damages at either two years' worth of average Royalty Fees and Marketing Fund Contributions or the remaining term of the agreement, whichever is shorter.
This liquidated damages clause is triggered if Bombs Away terminates the Franchise Agreement due to the franchisee's default or if the franchisee attempts to terminate the agreement without proper cause. The FDD states that this payment is in place of direct monetary damages Bombs Away may incur due to the loss of future Royalty Fees and Marketing Fund contributions. However, the franchisee may still be responsible for other damages or amounts arising from other sections of the agreement, injunctive relief, and attorney's fees.