Does the Deer Solution Franchise Agreement state that the liquidated damages calculation is fair and reasonable?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
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 the 2025 Deer Solution Franchise Disclosure Document, the Franchise Agreement stipulates that the franchisee agrees that the liquidated damages calculation is fair and reasonable. The agreement outlines how lost revenues and fees will be calculated in the event of a breach and termination.
Specifically, if the Deer Solution franchise has been operating for at least one calendar year, the calculation will be based on the franchisee's most recent calendar year gross sales. This amount is then projected to be earned in each remaining year of the franchise term. If the business has been open for less than a year, the calculation will use the average gross sales of Deer Solution businesses across the system during the year of termination, again projecting this average for the remainder of the term.
By agreeing to this clause, a prospective Deer Solution franchisee acknowledges the fairness and reasonableness of this liquidated damages approach. This could have significant financial implications if the franchisee breaches the agreement, as they would be liable for projected future revenues based on past performance or system averages.