How are liquidated damages calculated if a Camp Margaritaville franchisee wrongfully terminates the agreement after condemnation?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
ely upon all defaults or violations of this Agreement, not only the defaults or violations referenced in any written notice. Franchisee agrees that Franchisor has the right and authority (but not the obligation) to notify any lender and any or all of Franchisee's Owners, creditors and/or suppliers if Franchisee is in default under, or Franchisor has terminated, this Agreement.
ARTICLE XV. CONDEMNATION AND CASUALTY
Section 15.01 Condemnation. Franchisee shall, at the earliest possible time, give Franchisor written notice of any proposed taking by eminent domain, condemnation, compulsory acquisition, or similar proceeding. If such taking is substantial enough in Franchisee's or Franchisor's commercially reasonable judgment to render impractical the development or operation of the Resort in accordance with this Agreement, then, upon notice by either Party, this Agreement shall terminate at the time of such taking, and Franchisee shall pay Franchisor all monies due and owing at the time of the taking. In such event, there shall be no liquidated damages, provided that, if such termination is effectuated by Franchisee and within 3 years after the date of such termination, Franchisee, any of its Affiliates, or any Owner of Franchisee has an int
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, if the franchise agreement is terminated due to condemnation, there are generally no liquidated damages. However, if the franchisee terminates the agreement and, within three years, the franchisee, an affiliate, or an owner of the franchisee operates an RV resort at the same location without offering Camp Margaritaville the opportunity to operate it under a franchise or management agreement, the franchisee is considered to have wrongfully terminated the agreement.
In this case, Camp Margaritaville will demand that the franchisee pay liquidated damages. The amount of these damages is calculated by multiplying $4,000 by the number of overnight accommodations in the resort. This clause is designed to protect Camp Margaritaville's interests by preventing a franchisee from converting the location to a competing brand shortly after terminating the franchise agreement due to condemnation.
This provision is important for potential Camp Margaritaville franchisees to understand, as it outlines specific circumstances under which they could be liable for significant liquidated damages even after a termination event like condemnation, particularly if they choose to operate a competing business at the same location within a certain timeframe. Franchisees should carefully consider these implications and ensure they understand the restrictions on operating a similar business at the same location after termination.