How is the amount of Liquidated Damages determined for an Ella Cafe franchise?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| Liquidated Damages4 | An amount equal to average royalty fees plus brand marketing fees owed by you for a period of 52 weeks multiplied by the lesser of (i) twenty- four months or (ii) the remaining weeks of the franchise term. | On demand | Payable if we terminate your franchise agreement because of your default, or if you terminate the franchise agreement without the right to do so. |
Source: Item 6 — OTHER FEES (FDD pages 10–15)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, liquidated damages are determined by a specific formula if the franchise agreement is terminated due to the franchisee's default or if the franchisee terminates the agreement without proper cause.
The liquidated damages are calculated by first determining the average royalty fees plus brand marketing fees that the franchisee owed to Ella Cafe over the 52-week period preceding the termination date. This average is then multiplied by the lesser of two figures: either 24 months (two years) or the number of weeks remaining in the franchise term. This calculation determines the amount Ella Cafe is entitled to collect in addition to any other amounts owed under the franchise agreement.
If the Ella Cafe franchisee has not operated the business for at least 52 weeks, the calculation will be based on the average royalty fees and brand marketing fee contributions owed during the period in which the franchised business was in operation. This ensures that the liquidated damages are proportional to the actual operating history of the franchise, even if it's shorter than a year. The liquidated damages are payable on demand.