How is the amount of the Damages upon Termination fee determined for a Crisp & Green franchise?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
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(3) If your default under the Franchise Agreement results in termination of the Franchise Agreement, in addition to any other remedies available to us, you must pay us within 15 days after the effective date of termination actual damages in an amount equal to the average monthly fees paid or owed to us over the preceding 12 months (provided that if the Franchised Restaurant was not open during this entire 12-month period, we may use the Minimum Royalty Fee during such time period) multiplied by (a) 36 (being the number of months in three full years), or (b) the number of months
remaining in the Franchise Agreement had it not been terminated, whichever is lower. You must also reimburse us for the expense we incur (including reasonable attorneys' fees) as a result of your default of the Franchise Agreement, and to enforce and terminate the Franchise Agreement. If your default under an Area Development Agreement results in termination of the Area Development Agreement, in addition to any other remedies available to us, you must pay us within 15 days after the effective date of termination actual damages in an amount equal to $25,000 for each of the first two Franchise Agreements you failed to sign under the Area Development Agreement, plus $10,000 for each additional Franchise Agreement you failed to sign under the Area Development Agreement.
Source: Item 6 — OTHER FEES (FDD pages 15–22)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, the Damages upon Termination fee is determined based on specific calculations related to the average monthly fees paid or owed to Crisp & Green. If a franchisee's default results in the termination of the Franchise Agreement, they must pay Crisp & Green actual damages within 15 days of termination.
The amount is calculated as the average monthly fees paid or owed to Crisp & Green over the preceding 12 months. If the restaurant was not open for the entire 12-month period, Crisp & Green may use the Minimum Royalty Fee during that time. This average is then multiplied by either 36 (representing three full years) or the number of months remaining in the Franchise Agreement had it not been terminated, whichever is lower.
In addition to these damages, the franchisee must also reimburse Crisp & Green for expenses incurred due to the default, including reasonable attorneys' fees, to enforce and terminate the Franchise Agreement. This fee structure aims to compensate Crisp & Green for losses resulting from the franchisee's failure to uphold the agreement, covering both immediate financial losses and long-term revenue expectations. The actual amount will vary based on the specific circumstances and the remaining term of the franchise agreement.