What is the formula for calculating Liquidated Damages owed to Christies International Real Estate?
Christies_International_Real_Estate Franchise · 2025 FDDAnswer from 2025 FDD Document
| Fee (Note 1) | Amount (Note 2) | Due Date | Remarks |
|---|---|---|---|
| Liquidated Damages | An amount equal to the average of the Royalty Fees payable by you over the previous 12 months (or the annualized amount of Royalty Fees if your Business has not been open for at least 12 months) and multiplied by the lesser of 24 or the number of months remaining on the term of the License Agreement | When the License Agreement is terminated prior to the end of the initial term | This is not a penalty but is an attempt to calculate of our damages for lost future revenue resulting from your breach or termination of the License Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 14–17)
What This Means (2025 FDD)
According to Christies International Real Estate's 2025 Franchise Disclosure Document, liquidated damages are calculated based on royalty fees. If the License Agreement is terminated before the end of its initial term, Christies International Real Estate will calculate the average of the Royalty Fees payable by the franchisee over the previous 12 months. If the business has not been open for at least 12 months, the royalty fees will be annualized. This average or annualized amount is then multiplied by the lesser of 24 or the number of months remaining on the term of the License Agreement.
This liquidated damages clause is not considered a penalty but rather an attempt to calculate the lost future revenue resulting from the franchisee's breach or termination of the License Agreement. This means that if a franchisee terminates their agreement early, they could owe Christies International Real Estate a significant sum based on their past royalty payments and the remaining term of the agreement.
Prospective franchisees should carefully consider this liquidated damages provision, as it could represent a substantial financial obligation if they decide to terminate the agreement early. It is important to understand how the royalty fees are calculated and what factors could influence the amount of liquidated damages owed. Franchisees should also be aware that the amount could be substantial, especially if their business has been performing well and their royalty payments have been high.