Under what conditions would a Camp Margaritaville franchisee be deemed to have wrongfully terminated the agreement after condemnation and be liable for liquidated damages?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
to enter into a Successor Franchise Agreement is contested, each Party may cite to and rely 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 interest in or operates an RV resort at the location of the Resort ("Other Resort"), and such Other Resort has not been offered to Franchisor to be operated pursuant to a license or franchise from Franchisor or any of its Affiliates, or managed by Franchisor, then Franchisee shall be deemed to have wrongfully terminated this Agreement and Franchisee shall, upon Franchisor's demand, pay Franchisor the liquidated damages in the amount of $4,000 multiplied by the number of Overnight Accommodations
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, a franchisee may face liquidated damages if they are deemed to have wrongfully terminated the franchise agreement following a condemnation event. Specifically, this situation arises if the franchisee terminates the agreement after a condemnation that renders the operation of the resort impractical.
However, the imposition of liquidated damages is conditional. If, within three years of the termination date, the franchisee, any of its affiliates, or any owner of the franchisee acquires an interest in or operates an RV resort at the original Camp Margaritaville location (referred to as "Other Resort"), and this new resort is not offered to Camp Margaritaville for operation under a license or franchise, or for management by Camp Margaritaville, then the franchisee will be considered to have wrongfully terminated the agreement.
In such a case of wrongful termination, Camp Margaritaville has the right to demand that the franchisee pay liquidated damages. The amount of these damages is calculated by multiplying $4,000 by the number of overnight accommodations that were available at the original Camp Margaritaville resort. This provision is designed to protect Camp Margaritaville's interests by preventing a franchisee from abandoning the franchise only to establish a competing business at the same location without offering Camp Margaritaville the opportunity to continue its operation there.