Can Deer Solution hold the franchisee's owners liable for payments owed to the franchisor?
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 Deer Solution's 2025 Franchise Disclosure Document, Deer Solution can hold the franchisee and the franchisee's owners liable for payments owed to the franchisor. Specifically, Deer Solution can recover from the franchisee and the franchisee's owners, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due. This includes royalty fees, advertising contributions, and any other agreements between the franchisee and Deer Solution. All payments and obligations will be accelerated and due immediately.
In the event of a breach of the franchise agreement and subsequent termination by Deer Solution, the franchisee and its owners are liable for lost revenues, profits, and fees. This encompasses royalty fees, brand development fund fees, advertising contributions, and all other fees and expenses that would have been paid to Deer Solution throughout the term of the agreement had the breach not occurred. To calculate these damages, Deer Solution may use the franchisee's most recent calendar year gross sales, assuming those sales would have continued each year for the remainder of the agreement's term. If the business has been open for less than a year, Deer Solution can use the average gross sales of Deer Solution businesses across the system during that year.
This provision acts as a form of liquidated damages, which the franchisee agrees is fair and reasonable. This means that Deer Solution does not have to prove actual damages, but can instead rely on the formula outlined in the franchise agreement. This clause ensures that Deer Solution can pursue both the franchisee's business entity and the individual owners for any financial shortfalls, potentially increasing the franchisor's chances of recovering owed amounts.