Is the early termination fee for Bumble Roofing considered a penalty?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.8 Upon termination of this Agreement prior to its natural expiration date in accordance with its terms, Franchisee shall pay to Franchisor within thirty (30) days of the date of the termination, as an early termination fee for the premature termination of this Agreement and not as a penalty, an amount equal to twenty-four (24) times the average monthly continuing royalty fees payable to Franchisor over (a) the last twelve (12) months of the Business's active operations, or (b) the entire period the Business has been open for business, whichever is the shorter period.
Franchisee acknowledges and agrees that such early termination fee is a reasonable approximation of the damages Franchisor will incur resulting from the premature termination of the Franchise Agreement as a result of breach by Franchisee, is appropriate because actual damages incurred by Franchisor will be difficult or impossible to ascertain, is not a penalty, and shall not affect Franchisor's right to, and is not in lieu of, any other payment or remedy, damages or relief to Franchisor.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, the early termination fee is explicitly stated not to be a penalty. If a franchisee terminates the agreement before its natural expiration, they must pay Bumble Roofing an early termination fee within 30 days of termination.
The fee is calculated as 24 times the average monthly continuing royalty fees. This average is based on either the last 12 months of active business operations or the entire period the business has been open, whichever is shorter. Bumble Roofing states that this early termination fee is a reasonable approximation of the damages they will incur due to the premature termination of the franchise agreement caused by a franchisee's breach.
The FDD emphasizes that determining the actual damages to Bumble Roofing would be difficult or impossible to ascertain. Therefore, the early termination fee is not considered a penalty but rather a means to compensate Bumble Roofing for losses resulting from the franchisee's early exit. This fee does not prevent Bumble Roofing from pursuing other payments, remedies, damages, or relief.