Under what conditions can Camp Margaritaville seek actual damages in addition to liquidated damages?
Camp_Margaritaville Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 16.06 Actual Damages Under Special Circumstances. Franchisee acknowledges that certain defaults under this Agreement have the potential to materially denigrate the value of the Camp Margaritaville Intellectual Property and negatively impact consumer confidence in the Camp Margaritaville System, such that Franchisor may suffer additional harm for which the liquidated damages described in Section 16.05(a) may not adequately compensate Franchisor. Franchisor reserves the right, in its sole discretion, to seek actual damages in addition to the liquidated damages described in Section 16.05(a) if: (a) this Agreement is terminated as a result of Franchisee's willful default, including its failure to operate the Resort according to this Agreement; or (b) this Agreement is terminated as a result of a Transfer to a Competing Brand.
Source: Item 23 — RECEIPTS (FDD pages 72–406)
What This Means (2025 FDD)
According to Camp Margaritaville's 2025 Franchise Disclosure Document, Camp Margaritaville can seek actual damages in addition to liquidated damages under specific circumstances. These circumstances arise when the franchisee's actions could significantly harm the brand's reputation or intellectual property value. This provision acknowledges that certain defaults by the franchisee could cause harm that the standard liquidated damages may not adequately cover.
Specifically, Camp Margaritaville reserves the right to pursue actual damages if the franchise agreement is terminated due to the franchisee's willful default, including failing to operate the resort according to the agreement. This protects Camp Margaritaville from situations where a franchisee intentionally disregards the operational standards, thereby damaging the brand's reputation and potentially leading to financial losses beyond the scope of the liquidated damages.
Additionally, Camp Margaritaville may seek actual damages if the franchise agreement is terminated because the franchisee transfers the franchise to a competing brand. This clause aims to protect Camp Margaritaville from situations where a franchisee might try to leverage the established Camp Margaritaville brand to benefit a competitor, causing direct financial harm and brand dilution. This is a fairly common clause in franchise agreements, as franchisors want to protect their brand from being used to benefit competitors.