Under what circumstances are liquidated damages payable to Crave Cookies?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Liquidated damages | An amount equal to royalty fees and marketing fund contributions for the lesser of (i) 2 years or (ii) the remaining weeks of the franchise term. | On demand | Payable if we terminate your franchise agreement because of your default, or if you terminate the franchise agreement without the right to do so. |
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Crave Cookies's 2025 Franchise Disclosure Document, liquidated damages become payable under specific circumstances related to the termination of the franchise agreement. If Crave Cookies terminates the franchise agreement due to the franchisee's default, or if the franchisee terminates the agreement without having the proper legal right to do so, the franchisee will be required to pay liquidated damages.
The amount of these liquidated damages is calculated based on the royalty fees and marketing fund contributions that Crave Cookies would have received. The calculation covers the shorter of two periods: either two years or the remaining duration of the franchise term. This means a franchisee could potentially owe a substantial amount, equivalent to two years' worth of royalty and marketing contributions, depending on how far into the agreement the termination occurs.
This provision is fairly standard in franchising, designed to compensate the franchisor for lost future revenue and investment. Prospective Crave Cookies franchisees should carefully consider the implications of early termination, as the liquidated damages could represent a significant financial burden. It is important to understand what constitutes a 'default' under the franchise agreement and under what conditions a franchisee is permitted to terminate the agreement without penalty.