What is the Liquidated Brand Damages fee for a Chesters franchise?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of fee* | Amount | Due Date | Remarks |
|---|---|---|---|
| Indemnification | Will vary under circumstances | As incurred | You must reimburse us if we are held liable for claims from your Restaurant’s operation or incur costs in defending them. |
| Liquidated Brand Damages | $10,000 | As incurred | Due if you or your owners violate non-competition restrictions described in Items 17(q) and (r). |
| De-Branding Fee | $10,000 | As incurred Payment is due by credit card or automatic debit | Due if you do not comply with payment and Restaurant-specific physical de-branding obligations within 14 business days after Agreement expires or is terminated. |
Source: Item 6 — OTHER FEES (FDD pages 14–16)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, the Liquidated Brand Damages fee is $10,000. This fee is incurred if a franchisee or their owners violate the non-competition restrictions outlined in Items 17(q) and (r) of the franchise agreement. The fee is due as incurred.
Non-competition clauses are common in franchise agreements to protect the brand and prevent franchisees from directly competing with the franchisor or other franchisees, both during the term of the agreement and for a specified period after termination. These clauses typically restrict the franchisee from operating a similar business within a certain geographic area.
For a prospective Chesters franchisee, it's crucial to carefully review Items 17(q) and (r) of the franchise agreement to fully understand the scope and limitations of the non-competition restrictions. Violating these restrictions could result in the $10,000 Liquidated Brand Damages fee, in addition to other potential legal consequences. Franchisees should seek legal counsel to ensure they understand their obligations and the potential ramifications of non-compliance.
It is important to note that the Liquidated Brand Damages fee is separate from other fees, such as the Indemnification fee and the De-Branding Fee, which are also listed in Item 6 of the FDD. The Indemnification fee covers costs incurred by Chesters due to claims arising from the franchisee's restaurant operation, while the De-Branding Fee is charged if the franchisee fails to properly de-brand the restaurant after the agreement expires or is terminated.