Are the franchisee's owners jointly and severally liable for all monetary obligations to Deer Solution?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
(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 the 2025 Deer Solution Franchise Disclosure Document, the franchisee and the franchisee's owners are jointly and severally liable for monetary obligations to Deer Solution. This means that Deer Solution can pursue any or all of the owners for the full amount of the debt, regardless of their individual ownership stake or involvement in the business's daily operations. This liability extends to all payments, fees, monetary obligations, financial obligations, interest, and charges due to Deer Solution under the Franchise Agreement, Ancillary Agreements, or any other agreements between the franchisee and Deer Solution.
This provision has significant implications for prospective Deer Solution franchisees, especially those considering a multi-owner business structure. Each owner's personal assets are at risk, as Deer Solution can seek to recover the full debt from any one of them. It is crucial for potential franchisees to fully understand the financial obligations outlined in the franchise agreement and to carefully consider the risks associated with joint and several liability.
Furthermore, this liability extends beyond just current debts. If the franchise agreement is terminated due to a breach by the franchisee, Deer Solution can hold the franchisee and its owners jointly and severally liable for lost revenues, profits, and fees that Deer Solution would have received throughout the remainder of the agreement's term. The FDD specifies that Deer Solution can calculate these damages based on the franchisee's most recent calendar year gross sales or, if the business has been open for less than a year, on the average gross sales of Deer Solution businesses across the system. This calculation is considered a form of liquidated damages, which the franchisee agrees is fair and reasonable.
Therefore, prospective Deer Solution franchisees should seek legal and financial advice to fully understand the implications of this clause before signing the franchise agreement. Understanding the scope of financial exposure and the potential risks associated with joint and several liability is essential for making an informed decision about investing in a Deer Solution franchise.