When are Liquidated Damages due 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 due 'on demand.' This means that Ella Cafe requires immediate payment of liquidated damages once they notify the franchisee of the amount due.
The liquidated damages become payable if Ella Cafe terminates the franchise agreement due to the franchisee's default, or if the franchisee terminates the agreement without having the right to do so. The amount of these damages is calculated based on the average royalty fees plus brand marketing fees owed by the franchisee for a 52-week period. This average is then multiplied by the lesser of either 24 months or the number of weeks remaining in the franchise term.
For a prospective Ella Cafe franchisee, this means that terminating the franchise agreement early or being in default could result in a significant financial penalty. The franchisee would be responsible for not only the unpaid fees but also a liquidated damages payment that could cover up to two years' worth of royalty and marketing fees. It is important to understand the conditions under which termination can occur and the potential financial implications.