What is the initial non-compliance fee that Chocolate Bash may charge a franchisee?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
to the vendor. If CB Franchising does so, it may impose a reasonable markup or charge for administering the payment program.
- 4.8 Non-Compliance Fee. CB Franchising may charge Franchisee $500 for any instance of non-compliance with the System Standards or this Agreement (other than Franchisee's nonpayment of a fee owed to CB Franchising) which Franchisee fails to cure after 30 days' notice. Thereafter, CB Franchising may charge Franchisee $250 per week until Franchisee ceases such non-compliance. This fee is a reasonable estimate of CB Franchising's internal cost of personnel time attributable to addressing the non-compliance, and it is not a penalty or estimate of all damages arising from Franchisee's breach. The non-compliance
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, if a franchisee fails to correct any instance of non-compliance with the System Standards or the Franchise Agreement (excluding non-payment of fees owed to Chocolate Bash) within 30 days of receiving notice, Chocolate Bash may charge an initial non-compliance fee of $500.
Following the initial fee, Chocolate Bash may then charge the franchisee an additional $250 per week until the non-compliance is resolved. The FDD states that these fees are a reasonable estimate of Chocolate Bash's internal costs related to addressing the non-compliance and are not considered a penalty or a comprehensive estimate of all potential damages resulting from the franchisee's breach.
It is important to note that these non-compliance fees are in addition to any other rights and remedies Chocolate Bash may have, including default and termination of the Franchise Agreement. This means that franchisees could face both financial penalties and the loss of their franchise if they fail to adhere to the standards and agreements set forth by Chocolate Bash.