Are there any damages expressly authorized by the Bombs Away franchise agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
terminated, Bombs Away Franchising may enter the Location to remove the Marks and de-identify the Location. In this event, Bombs Away Franchising will not be charged with trespass nor be accountable or required to pay for any assets removed or altered, or for any damage caused by Bombs Away Franchising.
- 14.5 Liquidated Damages. 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. The "average Royalty Fees and Marketing Fund Contributions that
Franchisee owed to Bombs Away Franchising" shall not be discounted or adjusted due to any deferred or reduced Royalty Fees and Marketing Fund Contributions set forth in an addendum to this Agreement, unless this Section 14.5 is specifically amended in such addendum.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the franchise agreement outlines specific instances where damages are expressly authorized.
The agreement states that if Bombs Away terminates the agreement due to the franchisee's default, or if the franchisee attempts to terminate the agreement without proper cause, the franchisee must pay liquidated damages. These damages are calculated as a lump sum, not as a penalty. The amount is determined by multiplying the average Royalty Fees and Marketing Fund Contributions owed by the franchisee over the 12 months preceding the cessation of business operations by a factor. This factor is the lesser of 24 or the number of months remaining in the agreement's term. If the franchisee operated for less than 12 months, the calculation uses the average fees and contributions owed during their operational period.
Furthermore, the franchise agreement specifies that in any dispute arising from the agreement, each party waives the right to punitive damages or other monetary damages exceeding the prevailing party's actual losses. An exception exists for damages expressly authorized by federal statute or by the franchise agreement itself. This clause clarifies that while punitive damages are generally waived, the liquidated damages provision and any other expressly authorized damages remain enforceable.
In addition to liquidated damages, Bombs Away Franchising will not be held accountable for any damage caused by Bombs Away Franchising when entering the Location to remove the Marks and de-identify the Location if the Franchisee fails to do so within 30 days after the Agreement expires or is terminated.