When is the Liquidated Damages fee due to Devon Creek?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
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| -J P | Amount | Due Date | Remarks |
|---|---|---|---|
| Late Payment Fee | $50 per day | As incurred | If you fail to pay us the Continuing Royalty Fee, Brand Fund Fee, or if you fail to submit your Gross Revenue report when due, we may charge you $50 per day for each late submission in addition to interest charges explained below. |
| Non-sufficient Funds Fee | $250 | As incurred | If your check is returned or an electronic funds transfer from your bank account is denied for insufficient funds, for each occurrence we may charge you a Non-sufficient Funds Fee. |
| Reimbursement of Cost | Actual costs and expenses | As incurred. | See footnote 10. |
| and Expenses for Non- | |||
| compliance | |||
| Liquidated Damages | You must pay us the average monthly Royalty Fee and Brand Fund Contribution payable by you for the 12 months prior to your default multiplied by the lesser of (i) 36 months, or (ii) the number of months remaining in the term of your Franchise Agreement. | As incurred. | Payable to us in the event your Franchise Agreement is terminated due to your default. |
| Examination of Books and Records | Actual cost of examination plus related expenses. | As incurred. | We have the right under the Franchise Agreement to examine your books, records and tax returns pertaining to the Franchised Business. If an examination reveals that you have understated any Gross Revenue report by two percent (2%) or more, you must pay to us the cost of the audit and all travel and related expenses, in addition to repaying monies owed and interest o |
Source: Item 6 — OTHER FEES (FDD pages 8–16)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the liquidated damages fee is due 'as incurred.' This fee is payable to Devon Creek if the Franchise Agreement is terminated due to the franchisee's default.
The amount of the liquidated damages is calculated based on the average monthly Royalty Fee and Brand Fund Contribution payable by the franchisee for the 12 months prior to the default. This average is then multiplied by the lesser of either 36 months or the number of months remaining in the term of the Franchise Agreement.
For a prospective Devon Creek franchisee, this means that if they default on their agreement and it is terminated, they will owe Devon Creek a potentially substantial sum. This sum is designed to compensate Devon Creek for the anticipated future royalties and brand fund contributions they would have received had the franchisee continued operating for the full term of the agreement. Franchisees should be aware of the conditions that could trigger a default and the potential financial consequences.