Is the non-compliance fee charged by Bombs Away Franchising considered a penalty?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
may charge its then-current training fee. As of the date of this Agreement, the training fee is $350 per day.
- 4.5 Non-Compliance Fee. Bombs Away Franchising may charge Franchisee $500 for any instance of non-compliance with the System Standards or this Agreement (other than Franchisee's non-payment of a fee owed to Bombs Away Franchising) which Franchisee fails to cure after 30 days' notice. Thereafter, Bombs Away Franchising may charge Franchisee $250 per week until Franchisee ceases such non-compliance. This fee is a reasonable estimate of Bombs Away Franchising's internal cost of personnel time attributable to addressing the non-compliance, and it is not a penalty or estimate of all damages arising from Franchisee's breach. The non-compl
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the non-compliance fee is not considered a penalty. Bombs Away may charge a franchisee $500 for any instance of non-compliance with the System Standards or the Franchise Agreement, provided the franchisee fails to correct the issue after receiving 30 days' notice.
Following the initial fee, Bombs Away can charge $250 per week until the franchisee rectifies the non-compliance. The FDD states that these fees are a reasonable estimate of Bombs Away's internal costs related to addressing the non-compliance.
The document explicitly states that the non-compliance fee is not a penalty or an estimate of all damages arising from the franchisee's breach and is in addition to all of Bombs Away's other rights and remedies.