When are liquidated damages due to Cinch I.T.?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
| TYPE OF FEE1 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Liquidated Damages | Will vary under the circumstances | If Franchise Agreement is terminated as a result of your default | A lump sum equal to the value of the Royalty and Marketing Fees that you would have paid for the remainder 5 of the term. |
Source: Item 6 — OTHER FEES (FDD pages 14–20)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, liquidated damages are due if the Franchise Agreement is terminated due to the franchisee's default. The amount of these damages will vary depending on the circumstances but will equal the value of the Royalty and Marketing Fees that the franchisee would have paid for the remainder of the 5-year franchise term.
For a prospective Cinch I.T. franchisee, this means that if they breach the franchise agreement and Cinch I.T. terminates the agreement as a result, the franchisee will be required to pay a lump sum to cover the royalty and marketing fees they would have otherwise paid for the rest of the term. This could be a substantial financial burden, especially if the termination occurs early in the franchise term.
It's important for potential franchisees to fully understand the terms of the franchise agreement and the circumstances that could lead to termination and the imposition of liquidated damages. This includes understanding what constitutes a default under the agreement and what steps can be taken to avoid such a situation. Given that the liquidated damages are based on future royalty and marketing fees, the actual amount will depend on the franchisee's projected sales and the applicable royalty and marketing fee rates at the time of termination.