Besides termination, what other rights does Deer Solution have upon a franchisee's default?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign
the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
(2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
(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, Brand Development 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 Deer Solution 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.
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, besides termination, Deer Solution has several rights upon a franchisee's default. Deer Solution can void and terminate the agreement and then market, sell, transfer, convey, and assign the rights granted to the franchisee to another entity at their discretion, without providing compensation to the franchisee. They can also hold the franchisee and their owners liable for all outstanding payments, fees, monetary obligations, financial obligations, interest, and charges owed to Deer Solution. This includes, but is not limited to, Royalty Fees and Advertising Contributions, which will be accelerated and immediately due.
Furthermore, Deer Solution can hold the franchisee and their owners liable for lost revenues, profits, and fees, including Royalty Fees, Brand Development Fund Fees, Advertising Contributions, and all other fees and expenses that would have been paid throughout the term of the agreement had the breach not occurred and the agreement not been terminated. To calculate these damages, Deer Solution may use the franchisee's most recent calendar year Gross Sales or, if the business has been open for less than a year, the average Gross Sales of Deer Solution businesses across the system during the year of termination. This calculation assumes that these Gross Sales would have been earned each year for the remainder of the agreement's term.
Deer Solution considers this method of calculating damages as a form of liquidated damages, which the franchisee agrees is fair and reasonable. This means that Deer Solution aims to recover all the financial benefits it would have received if the franchisee had fulfilled the entire term of the agreement. This could represent a significant financial burden for a franchisee in default, as they could be liable for not only existing debts but also projected future earnings that Deer Solution anticipates losing due to the termination.