Is the Dryject termination fee in addition to or in lieu of other damages?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) The parties further agree that, in addition to such other damages awarded or any and all other damages We may have in the future for any violations of Your post-termination obligations, if this Agreement is terminated by Us because of Your default or if You terminate without cause, You shall be liable to Us for a lump sum termination fee equal to the net present value of the Royalty Service Fees and Marketing Fund Fees that would have become due following termination of this Agreement, for the period this Agreement would have remained in effect but for Your default. Royalty Service Fees and Marketing Fund Fees for purposes of this Section shall be calculated based on the Franchised Business' average monthly Gross Revenues for the twelve (12) months preceding the termination date; or (ii) a payment amount equal to the Minimum Royalty Service Fees and Marketing Fund Fees that would have become due following termination of this Agreement for the period this Agreement would have remained in effect but for Your default; whichever is greater. The payment amount would be equal to the net present value utilizing the
Prime Rate as published per the Wall Street Journal. This fee is in addition to, and not in lieu of any other damages We sustain as a result of the termination. The parties hereto acknowledge and agree that it would be impracticable to determine precisely the damages We would incur from this Agreement's termination due to Your default, and the loss of cash flow due to, among other things, the complications of determining what costs, if any, We might have saved and how much the fees would have grown over what would have been this Agreement's remaining Term. The parties consider this liquidated damages provision to be a reasonable, good faith and genuine pre-estimate of those damages, and not a penalty.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, the termination fee is in addition to other damages. If Dryject terminates the franchise agreement due to the franchisee's default, or if the franchisee terminates the agreement without cause, the franchisee is liable for a termination fee. This fee is a lump sum equal to the net present value of the Royalty Service Fees and Marketing Fund Fees that would have been due for the remainder of the agreement term.
The calculation of these fees is based on either the average monthly Gross Revenues for the 12 months preceding termination or the Minimum Royalty Service Fees and Marketing Fund Fees that would have become due. The higher of these two amounts is used to determine the termination fee. The net present value is calculated using the Prime Rate as published in the Wall Street Journal.
The FDD specifies that this termination fee is not the only financial responsibility of the franchisee upon termination. Dryject retains the right to pursue any other damages they incur as a result of the termination, meaning the franchisee could be liable for additional costs beyond the termination fee. Dryject states that this liquidated damages provision is a reasonable, good faith, and genuine pre-estimate of those damages, and not a penalty.