Under what circumstances is Burneys Sweets More entitled to liquidated damages?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| Liquidated damages | An amount equal to royalty fees and marketing fund contributions for the lesser of (i) 2 years or (ii) the remaining weeks of the franchise term. | On demand | Payable if we terminate your franchise agreement because of your default, or if you terminate the franchise agreement without the right to do so. |
| Transfer Damages | 15% of the price paid by the transferee or $25,000, whichever is greater. | Within 15 days of our demand. | Due only if you breach your transfer obligations to us. These are liquidated damages and not a penalty. |
Source: Item 6 — OTHER FEES (FDD pages 11–17)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, the franchisor may be entitled to liquidated damages if the franchise agreement is terminated due to the franchisee's default, or if the franchisee terminates the agreement without the right to do so. These damages are calculated as the sum of royalty fees and marketing fund contributions for a period equal to the lesser of two years or the remaining weeks of the franchise term. This payment is due on demand.
Burneys Sweets More also specifies 'Transfer Damages' as a type of liquidated damages. These are due if a franchisee breaches their transfer obligations to Burneys Sweets More. The amount is 15% of the price paid by the transferee or $25,000, whichever is greater, and is due within 15 days of demand. The FDD explicitly states that these transfer damages are liquidated damages and not a penalty.
Liquidated damages provisions are common in franchise agreements. They aim to compensate the franchisor for the anticipated losses resulting from early termination or breaches of contract. Prospective Burneys Sweets More franchisees should carefully consider these terms and understand the potential financial implications of terminating the agreement early or failing to meet their obligations, especially regarding transfers.