How is the royalty calculated for a Burneys Sweets More franchise?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor terminates this Agreement based upon Franchisee's default (or if Franchisee purports to terminate this Agreement except as permitted under Section 17(f)), then within 10 days thereafter Franchisee shall pay to Franchisor a lump sum (as liquidated damages and not as a penalty) calculated as follows: (x) the average monthly Royalty Fees and Brand Fund contributions that Franchisee owed to Franchisor under this Agreement for the 52-week period preceding the date on which Franchisee ceased operating the Business; multiplied by (y) the lesser of (1) 104 or (2) the number of weeks remaining in the then-current term of this Agreement.
If Franchisee had not operated the Business for at least 52 weeks, then (x) will equal the average Royalty Fees and Brand Fund contributions that Franchisee owed to Franchisor during the period that Franchisee operated the Business.
The "average Royalty Fees and Brand Fund contributions that Franchisee owed to Franchisor" shall not be discounted or adjusted due to any deferred or reduced Royalty Fees and Brand Fund contributions set forth in an addendum to this Agreement, unless this Section 18(r) is specifically amended in such addendum.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
Based on the 2025 Burneys Sweets More Franchise Disclosure Document, the document does not explicitly state how the royalty is calculated. However, it does provide information on how liquidated damages are calculated if the agreement is terminated due to the franchisee's default.
In the event of termination due to franchisee default, Burneys Sweets More calculates liquidated damages as follows: the average monthly Royalty Fees and Brand Fund contributions that the franchisee owed for the 52-week period preceding the date the franchisee ceased operations, multiplied by the lesser of 104 or the number of weeks remaining in the current term of the agreement. If the franchisee operated the business for less than 52 weeks, the calculation uses the average Royalty Fees and Brand Fund contributions owed during the period of operation.
Prospective Burneys Sweets More franchisees should note that any deferred or reduced Royalty Fees and Brand Fund contributions outlined in an addendum to the agreement will not be discounted or adjusted in the calculation of liquidated damages, unless the section detailing liquidated damages is specifically amended in such addendum. For a clear understanding of how ongoing royalties are calculated, a prospective franchisee should directly ask the franchisor for clarification, as this detail is not provided in the excerpt.