Is the non-refundable deposit considered a penalty or liquidated damages in the Coffee News franchise agreement?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
(USD) per week.
- 2.1.4.4 prices for all other countries in addition to the U.S. and Canada shall be based on USD conversion to the respectful local currencies.
- 2.1.5 Additi
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
Based on the 2025 Coffee News Franchise Disclosure Document, the document mentions a non-refundable deposit of $7,000.00 for additional franchises. However, the FDD does not explicitly state whether this non-refundable deposit is considered a penalty or liquidated damages.
Without a clear definition in the FDD, it is important for prospective franchisees to understand the implications of this non-refundable deposit. If the agreement treats the deposit as a penalty, its enforceability may be questionable, as penalties are often disfavored in contract law. Conversely, if it's considered liquidated damages, it represents an agreed-upon estimate of potential damages the franchisor might incur due to the franchisee's breach.
Therefore, a prospective Coffee News franchisee should seek clarification from the franchisor regarding the specific legal characterization of the $7,000.00 non-refundable deposit. Understanding whether it is intended as a penalty or as liquidated damages is crucial for assessing the financial risks and obligations associated with acquiring additional franchises.