Does the Crown Gold Exchange franchise agreement specify any damages that are expressly authorized?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee fails to do so within 30 days after this Agreement expires or is terminated, Crown Gold Franchising may enter the Location to remove the Marks and de-identify the Location.
In this event, Crown Gold Franchising will not be charged with trespass nor be accountable or required to pay for any assets removed or altered, or for any damage caused by Crown Gold Franchising.
- 14.5 Liquidated Damages. If Crown Gold Franchising terminates this Agreement based upon Franchisee's default (or if Franchisee purports to terminate this Agreement except as permitted under Section 14.1), then within 10 days thereafter Franchisee shall pay to Crown Gold
Franchising a lump sum (as liquidated damages and not as a penalty) calculated as follows: (x) the average Royalty Fees that Franchisee owed to Crown Gold Franchising under this Agreement for the 52-week period preceding the date on which Franchisee ceased operating the Business; multiplied by (y) the lesser of (1) 104 or (2) the number of weeks remaining in the then-current term of this Agreement. If Franchisee had not operated the Business for at least 52 weeks, then (x) will equal the average Royalty Fees and Marketing Fund Contributions that Franchisee owed to Crown Gold Franchising during the period that Franchisee operated the Business. The "average Royalty Fees that Franchisee owed to Crown Gold Franchising" shall not be discounted or adjusted due to any deferred or reduced Royalty Fees and Marketing Fund Contributions set forth in an addendum to this Agreement, unless this Section 14.5 is specifically amended in such addendum. Franchisee acknowledges that a precise calculation of the full extent of Crown Gold Franchising's damages under these circumstances is difficult to determine and the method of calculation of such damages as set forth in this Section is reasonable. Franchisee's payment to Crown Gold Franchising under this Section will be in lieu of any direct monetary damages that Crown Gold Franchising may incur as a result of Crown Gold Franchising's loss of Royalty Fees and Marketing Fund Contributions that would have been owed to Crown Gold Franchising after the date of termination; however, such payment shall be in addition to all damages and other amounts arising under Section 14.3 and Section 14.4, Crown Gold Franchising's right to injunctive relief for enforcement of Article 13, and any attorneys' fees and other costs and expenses to which Crown Gold Franchising is entitled under this Agreement. Except as provided in this Section, Franchisee's payment of this lump sum shall be in addition to any other right or remedy that Crown Gold Franchising may have under this Agreement or otherwise.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, the Crown Gold Exchange franchise agreement outlines specific instances where liquidated damages are expressly authorized. If Crown Gold Exchange terminates the agreement due to the franchisee's default, or if the franchisee attempts to terminate the agreement without proper cause, the franchisee must pay Crown Gold Exchange a lump sum within 10 days. This sum is calculated as liquidated damages and not as a penalty.
The calculation for these liquidated damages involves multiplying two factors: (x) the average Royalty Fees that the franchisee owed to Crown Gold Exchange for the 52-week period preceding the cessation of business operations, and (y) the lesser of 104 or the number of weeks remaining in the current term of the agreement. If the franchisee operated the business for less than 52 weeks, factor (x) will be the average Royalty Fees and Marketing Fund Contributions owed during the period of operation. It's important to note that any deferred or reduced Royalty Fees and Marketing Fund Contributions outlined in an addendum to the agreement will not discount or adjust this average unless the section on liquidated damages is specifically amended in that addendum.
The Crown Gold Exchange franchise agreement states that this method of calculating damages is considered reasonable, acknowledging that precisely determining the full extent of damages is difficult. The franchisee's payment covers Crown Gold Exchange's loss of Royalty Fees and Marketing Fund Contributions that would have been owed after the termination date. However, this payment is in addition to other damages and amounts arising under other sections of the agreement, including rights to injunctive relief and attorneys' fees. This liquidated damages clause does not limit any other rights or remedies Crown Gold Exchange may have under the agreement or otherwise.