What fees are included when calculating lost revenues for a terminated Deer Solution franchisee?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 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, 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, if the franchise agreement is terminated, Deer Solution has the right to recover lost revenues, profits, and fees from the franchisee and their owners. These include, but are not limited to, Royalty Fees, Brand Development Fund Fees, Advertising Contributions, and all other fees, revenues, and/or expenses that would have been paid to Deer Solution throughout the term of the agreement had the breach not occurred and the agreement not been terminated.
To calculate these lost revenues, Deer Solution will use the franchisee's most recent calendar year Gross Sales. They will assume that this level of Gross Sales would have continued each year for the remainder of the agreement's term. If the Deer Solution franchise has been open for less than a year, the franchisor will use the average Gross Sales of all Deer Solution businesses in the system during that year to project lost future revenues.
Deer Solution considers this method of calculating lost revenues to be a form of liquidated damages, which the franchisee agrees is fair and reasonable. This means that the franchisee is agreeing in advance to a specific method of calculating damages in the event of a breach or termination, potentially avoiding a more complex and uncertain legal battle to determine the actual amount of losses.