What is the basis for the liquidated damages assessed by Cool Binz upon termination of the franchise agreement?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Agreement is terminated pursuant to this Section 12, then you shall pay to us, within thirty (30) days following the date of such terminated, as liquidated damages, because actual
damages incurred by us will be difficult or impossible to ascertain, and not as a penalty, an amount equal to the sum of the Royalty fees owed during the immediately preceding 36 full calendar months (or such shorter period as equals the unexpired Term at the date of termination, without regard to any express right to terminate prior to the expiration of the Term); provided, however, if the COOL BINZ Business has been open for fewer than 36 months, then the average monthly Royally fees owed since the date the COOL BINZ Business opened multiplied by 36, plus any applicable taxes assessed on such payment.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, if the franchise agreement is terminated, Cool Binz will assess liquidated damages. These damages are based on the royalty fees owed.
Specifically, the franchisee must pay Cool Binz within 30 days of termination an amount equal to the sum of royalty fees owed during the 36 full calendar months immediately preceding the termination date. This period may be shorter if the unexpired term is less than 36 months at the time of termination. The liquidated damages are not considered a penalty, but rather a means to compensate Cool Binz for damages that are difficult to precisely calculate.
If the Cool Binz business has been open for fewer than 36 months, the liquidated damages will be calculated by averaging the monthly royalty fees owed since the business opened and multiplying that average by 36, plus any applicable taxes. This ensures that Cool Binz receives a consistent method of compensation regardless of how long the franchise has been in operation.
Prospective franchisees should understand this calculation, as it could represent a significant financial obligation upon termination. It is important to factor this potential cost into their financial planning and to fully understand the conditions under which the franchise agreement can be terminated.