Are there any specific damages that the Desi District Franchise Agreement expressly authorizes?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
14.5 Liquidated Damages. If Desi District Franchise Group terminates this Agreement based upon Franchisee's default (or if Franchisee purports to terminate this Agreement except as permitted under Section 14.1), then within 10 days thereafter Franchisee shall pay to Desi District Franchise Group a lump sum (as liquidated damages and not as a penalty) calculated as follows: (x) the average Royalty Fees that Franchisee owed to Desi District Franchise Group under this Agreement for the 52-week period preceding the date on which Franchisee ceased operating the Business; multiplied by (y) the lesser of (1) 104 or (2) the number of weeks remaining in the thencurrent term of this Agreement. If Franchisee had not operated the Business for at least 52 weeks, then (x) will equal the average Royalty Fees that Franchisee owed to Desi District Franchise Group during the period that Franchisee operated the Business. The "average Royalty Fees that Franchisee owed to Desi District Franchise Group" shall not be discounted or adjusted due to any deferred or reduced Royalty Fees set forth in an addendum to this Agreement, unless this Section 14.5 is specifically amended in such addendum. Franchisee acknowledges that a precise calculation of the full extent of Desi District Franchise Group's damages under these circumstances is difficult to determine and the method of calculation of such damages as set forth in this Section is reasonable. Franchisee's payment to Desi District Franchise Group under this Section will be in lieu of any direct monetary damages that Desi District Franchise Group may incur as a result of Desi District Franchise Group's loss of Royalty Fees that would have been owed to Desi District Franchise Group after the date of termination; however, such payment shall be in addition to all damages and other amounts arising under Section 14.3 and Section 14.4, Desi District Franchise Group's right to injunctive relief for enforcement of Article 13, and any attorneys' fees and other costs and expenses to which Desi District Franchise Group is entitled under this Agreement. Except as provided in this Section, Franchisee's payment of this lump sum shall be in addition to any other right or remedy that Desi District Franchise Group may have under this Agreement or otherwise.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the Franchise Agreement outlines specific instances where damages are expressly authorized. If Desi District terminates the agreement due to the franchisee's default, or if the franchisee attempts to terminate the agreement without proper cause, the franchisee is obligated to pay Desi District a lump sum as liquidated damages, not as a penalty.
This lump sum is calculated by multiplying (x) the average Royalty Fees owed by the franchisee for the 52-week period preceding the cessation of business operations by (y) the lesser of (1) 104 or (2) the number of weeks remaining in the current term of the agreement. If the franchisee operated the business for less than 52 weeks, the average Royalty Fees are calculated based on the period the business was in operation. These average Royalty Fees will not be discounted or adjusted, even if there were deferred or reduced Royalty Fees outlined in an addendum to the agreement, unless the section regarding liquidated damages is specifically amended in that addendum.
The Franchise Agreement states that calculating the full extent of Desi District's damages is difficult, and the method described is considered reasonable. This payment covers Desi District's loss of Royalty Fees after termination but is in addition to damages and amounts arising under other sections, Desi District's right to injunctive relief for enforcement of specific articles, and any attorneys' fees and other costs Desi District is entitled to under the agreement. This payment is in addition to any other right or remedy that Desi District may have under the agreement or otherwise.