Under what conditions will Cinch I.T. assess liquidated damages?
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 may be assessed if the Franchise Agreement is terminated due to the franchisee's default. In such cases, Cinch I.T. will charge a lump sum.
The amount of liquidated damages will be equivalent to the value of the Royalty and Marketing Fees that the franchisee would have paid for the remainder of the 5-year franchise term. This means Cinch I.T. aims to recoup the anticipated revenue they would have received had the franchisee continued operating for the full term.
For a prospective Cinch I.T. franchisee, this highlights the importance of understanding the terms of the Franchise Agreement and the potential financial consequences of defaulting. Franchisees should carefully consider their ability to meet the obligations outlined in the agreement to avoid potential termination and the associated liquidated damages. It is important to note that the liquidated damages are based on the expected Royalty and Marketing Fees, which are calculated on gross sales.