How does Deck Medic calculate lost revenues and fees if a franchisee breaches the agreement?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
- (3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, National Advertising Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement.
In calculating and determining the foregoing, Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated.
If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Deck Medic Business Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated.
Franchisee agrees that the foregoing is a form of liquidated damages, and that it is fair and reasonable.
(4) To hold Franchisee and Franchisee's Owners liable for all costs, fees, expenses, and/or damages incurred by Franchisor and/or suffered by Franchisor as a result of a breach or termination including, but not limited to, the recovery of reasonable attorney fees and expenses including court costs, arbitration fees, mediation fees, arbitrator fees, mediator fees, depositions and other related expenses.
(5) To enjoin, restrain, and otherwise prohibit Franchisee from operating the Franchised Business
Source: Item 23 — RECEIPTS (FDD pages 43–228)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, if a franchisee breaches the agreement, Deck Medic can hold the franchisee and their owners liable for lost revenues, profits, and fees. These include Royalty Fees, National Advertising Fund Fee, Advertising Contributions, and all other fees and expenses that would have been paid to Deck Medic throughout the term of the agreement, had the breach not occurred and the agreement not been terminated. This calculation aims to cover the financial losses Deck Medic would have sustained due to the franchisee's non-compliance.
To determine these lost revenues and fees, Deck Medic will use the franchisee's most recent calendar year Gross Sales. The assumption is that the franchisee would have continued to generate the same Gross Sales each year for the remainder of the agreement's term. However, if the Deck Medic business has been open for less than a year, the calculation will be based on the average Gross Sales of all Deck Medic businesses in the system during the year the agreement was terminated. This average will then be projected for the remaining term of the agreement.
Deck Medic considers this method of calculation a form of liquidated damages, which the franchisee agrees is fair and reasonable. In addition to lost revenues, Deck Medic can also hold the franchisee and their owners liable for all costs, fees, expenses, and damages incurred as a result of the breach or termination. This includes reasonable attorney fees, court costs, arbitration fees, mediation fees, arbitrator fees, mediator fees, depositions, and other related expenses. Deck Medic also has the right to legally prevent the franchisee from operating the franchised business.