Can Deer Solution recover lost revenues and profits from a terminated 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 the 2025 Deer Solution Franchise Disclosure Document, Deer Solution can hold a terminated franchisee liable for lost revenues, profits, and fees. This includes, but isn't 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 had Deer Solution not terminated the agreement. This liability extends to both the franchisee and the franchisee's owners, jointly and severally.
The FDD specifies how Deer Solution will calculate these damages. If the franchise has been open for at least one calendar year, Deer Solution can use the franchisee's most recent calendar year gross sales to project lost revenues and fees for each remaining year of the franchise term. If the franchise has been open for less than a year, Deer Solution can use the average gross sales of Deer Solution businesses across the system during the year of termination to project these losses.
The agreement states that the franchisee agrees that this method of calculating damages is fair and reasonable, characterizing it as a form of liquidated damages. This means that the franchisee acknowledges and accepts this calculation method as a reasonable estimate of Deer Solution's losses resulting from the termination. This clause aims to provide Deer Solution with a predictable and enforceable means of recovering losses in the event of a franchisee breach and termination.