If a Casiola Franchisee terminates the agreement improperly, what is the consequence?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
- (1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
- (2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
- (3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement. In calculating and determining the foregoing, Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Casiola Business Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. Franchisee agrees that the foregoing is a form of liquidated damages, and that it is fair and reasonable.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to the 2024 Casiola Franchise Disclosure Document, if a franchisee terminates the agreement improperly, Casiola has the right to void and terminate the agreement, and then market, sell, transfer, convey, and assign the rights granted to the franchisee to another entity at Casiola's discretion, without providing any compensation to the franchisee. The franchisee and their owners will be held liable, jointly and severally, for all outstanding payments, fees, monetary obligations, financial obligations, interest, and charges owed to Casiola. This includes, but is not limited to, Royalty Fees and Advertising Contributions, which will be accelerated and immediately due.
Furthermore, Casiola can hold the franchisee and their owners liable for lost revenues, profits, and fees that Casiola would have received throughout the term of the agreement had the breach not occurred. This includes Royalty Fees, Brand Development Fund Fees, Advertising Contributions, and all other fees and expenses. To calculate these damages, Casiola will use the franchisee's most recent calendar year Gross Sales and assume that those sales would have continued each year for the remainder of the agreement's term. If the business has been open for less than a year, Casiola will use the average Gross Sales of Casiola businesses across the system during the year of termination to project lost revenues.
The FDD states that the franchisee agrees that the method of calculating lost revenues is a form of liquidated damages and is considered fair and reasonable. Additionally, upon termination, the franchisee must cease operating as a Casiola business, take actions to cancel any assumed names related to the licensed marks, and transfer all booking systems, data, customer lists, telephone numbers, email addresses, and web-based media listings to Casiola. The franchisee must also comply with all restrictive covenants outlined in the agreement, including those in Article 6, and provide written proof of compliance with these terms within 30 days of termination.