Is the non-compliance fee the only remedy Chocolate Bash has for franchisee non-compliance?
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 the 2024 Chocolate Bash Franchise Disclosure Document, the non-compliance fee is not the only remedy available to Chocolate Bash for franchisee non-compliance. Chocolate Bash can charge a franchisee $500 for any instance of non-compliance with the System Standards or the Franchise Agreement (excluding nonpayment of fees owed to Chocolate Bash) if the franchisee fails to correct the issue after 30 days' notice. After this initial period, Chocolate Bash may then charge the franchisee $250 per week until the non-compliance is resolved.
The FDD clarifies that this fee is designed to cover Chocolate Bash's internal personnel costs associated with addressing the non-compliance and is not considered a penalty or a comprehensive estimate of all potential damages resulting from the franchisee's breach.
Importantly, the non-compliance fee is stated to be in addition to all of Chocolate Bash's other rights and remedies, including default and termination of the Franchise Agreement as outlined in Section 14.2. This means that Chocolate Bash retains the right to pursue other legal or contractual remedies in response to a franchisee's non-compliance, depending on the severity and nature of the breach.