What is the page number for the 'Remedies' section in the Cinch I.T. Franchise Disclosure Document?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
38. REMEDIES
- (a) The parties agree that any claim for lost earnings or profits by You shall be limited to a maximum amount equal to the net profits of the Franchised Business for the prior year as shown on Your federal income tax return.
- CINCH I.T. Franchise Disclosure Document 53 (b) The parties further agree that, in addition to such other damages awarded, awarded or any and all other damages We may have in the future for any violations of Your post-termination obligations, if this Agreement is terminated by Us because of Your default or if You terminate without cause, You shall be liable to Us for a lump sum termination fee equal to the net present value of the Royalties and Marketing Fund Fees that would have become due following termination of this Agreement for the period this Agreement would have remained in effect but for Your default. Royalties and Marketing Fund Fees for purposes of this Section shall be calculated based on the Franchised Business' average monthly Gross Sales for the twelve (12) months preceding the termination date or the number of months in operation if less than twelve (12). If You have not operated Your Franchised Business for at least twelve (12) months preceding
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, the 'Remedies' section begins on page 53. This section outlines the recourse available to both the franchisee and Cinch I.T. in the event of a breach of the franchise agreement. It is crucial for prospective franchisees to understand these remedies, as they define the financial and legal consequences of failing to meet contractual obligations.
One key aspect of the 'Remedies' section is the limitation on claims for lost earnings or profits by the franchisee. Such claims are capped at the net profits of the franchised business for the prior year, as reported on the franchisee's federal income tax return. This limitation could significantly impact the amount a franchisee can recover in a dispute with Cinch I.T.
Additionally, the document specifies that if Cinch I.T. terminates the agreement due to the franchisee's default, or if the franchisee terminates without cause, the franchisee is liable for a termination fee. This fee is calculated as the net present value of the royalties and marketing fund fees that would have been due for the remainder of the agreement's term. The calculation is based on the average monthly gross sales of the franchised business over the 12 months preceding termination, or the average monthly gross sales of all Cinch I.T. franchised businesses if the franchisee has been operating for less than 12 months. This termination fee is in addition to any other damages Cinch I.T. may incur as a result of the termination.
The FDD states that this liquidated damages provision is considered a reasonable and genuine pre-estimate of the damages Cinch I.T. would incur due to the agreement's termination. This acknowledgement suggests that the parties have agreed in advance on a method for calculating damages, which can provide clarity and potentially reduce disputes over the actual amount of losses. Prospective franchisees should carefully review this section with legal counsel to fully understand their potential financial exposure in the event of termination.