What is the purpose of the Liquidated Damages fee charged by 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, the Liquidated Damages fee is not a penalty but an attempt to calculate the franchisor's damages for lost future revenue resulting from a franchisee's breach or termination of the License Agreement prior to the end of its initial term. The amount is equal to the average of the Royalty Fees payable by the franchisee over the previous 12 months (or the annualized amount of Royalty Fees if the 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.
For a prospective Christies International Real Estate franchisee, this means that if you terminate your agreement early or breach the agreement leading to termination, you will owe this fee. The fee is designed to compensate Christies International Real Estate for the future royalties they expected to receive from your franchise. The amount can be substantial, as it is based on your average royalty payments over a year, multiplied by up to 24 months.
It is important for a potential Christies International Real Estate franchisee to understand the implications of this liquidated damages clause. Before signing the License Agreement, carefully consider the length of the term and your ability to fulfill the obligations. Be aware that terminating the agreement early could result in a significant financial obligation to Christies International Real Estate. This type of clause is relatively common in franchising to protect the franchisor's investment and expected returns.