What is the timeframe for a Burneys Sweets More franchisee to pay liquidated damages after termination?
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.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, if the Franchisor terminates the agreement due to the Franchisee's default, or if the Franchisee terminates the agreement without permission, the Franchisee must pay liquidated damages to Burneys Sweets More within 10 days.
The liquidated damages are calculated as a lump sum, not a penalty. The amount is determined by multiplying two factors: (x) the average monthly Royalty Fees and Brand Fund contributions that the Franchisee owed for the 52-week period before ceasing operations, and (y) the lesser of 104 or the number of weeks remaining in the agreement's term. If the franchisee operated for less than 52 weeks, the average is calculated based on the period they were in business.
This means a franchisee needs to be prepared to pay a potentially significant sum to Burneys Sweets More shortly after termination. The amount will depend on their past royalty and brand fund contributions, as well as the remaining term of the franchise agreement. This could create a substantial financial burden for a franchisee who is already facing business closure.