What specific rights does the Exit Subfranchisor retain to collect fees after termination?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
compensation of Subfranchisor (as defined above), issued to the account of Franchisee by a commercial bank, payable to Subfranchisor, at sight, within thirty (30) days from the date thereof, upon presentation of any affidavit signed by Subfranchisor stating that Subfranchisor is entitled to payment pursuant to this Agreement.
- (B) Termination of this Agreement by Subfranchisor shall not terminate any monetary obligations owed by Franchisee to EXIT, Subfranchisor or the Brokers' Council. Termination of this Agreement by Subfranchisor shall not be an exclusive remedy and shall not in any way affect the rights of EXIT or Subfranchisor to receive, or collect fees or other amounts payable by Franchisee under this Agreement, to enforce the provisions of this Agreement against Franchisee, to sue for damages, seek and obtain ex parte injunctive relief, to pursue any other equitable remedy for breach of this Agreement by Franchisee or otherwise constitute a waiver of any of Subfranchisor's other rights upon the occurrence of an Event of Default. Subfranchisor shall not be obligated following any such termination or cancellation, to refund any amount previously paid by Franchisee under the terms of this Agreement.
- (C) Notwithstanding the above, if Franchisee fails to correct an alleged breach of this Agreement within the applicable time period after receipt of written notice from Subfranchisor, Subfranchisor will also have the right, upon written notice to Franchisee, to: (1) terminate the territorial exclusivity of the Protected Territory; or (2) reduce the size of the Protected Territory.
- (D) Nothing in this Section 16 will preclude Subfranchisor from seeking other remedies against Franchisee under state or federal laws or under this Agreement, including, but not limited to, recovery of attorneys' fees, punitive damages and injunctive relief.
16.3. Damages
If this Agreement is terminated by Subfranchisor pursuant to this Section 16, or if Franchisee breaches this Agreement by a wrongful termination of this Agreement, then Subfranchisor will be entitled to seek recovery from Franchisee for all of the damages that Subfranchisor sustained prior to the termination, or will sustain in the future as a result of Franchisee's breach of this Agreement. The actual damages that Subfranchisor would suffer for the loss of prospective fees and other amounts due under this Agreement would be difficult, if not impossible, to ascertain. Therefore, Franchisee agrees, in addition to all damages that Subfranchisor sustained prior to the date of termination, Subfranchisor shall be entitled to recover, for Subfranchisor and for EXIT, as liquidated damages and not as a penalty, an amount equal to the average monthly Continuing Fees paid to Subfranchisor and EXIT in accordance with the EXIT Formula for the twelve (12) month period immediately preceding the termination multiplied by the number of months remaining until the Expiration Date.
17. POST TERMINATION - RIGHTS AND OBLIGATIONS
**17.1.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the subfranchisor retains several rights to collect fees and other amounts from the franchisee even after termination of the franchise agreement. Termination does not end any monetary obligations the franchisee owes to Exit, the subfranchisor, or the Brokers' Council. The subfranchisor can continue to pursue collection of fees or other amounts payable under the agreement and can enforce the agreement's provisions, sue for damages, seek injunctive relief, or pursue other equitable remedies for breach of contract.
Specifically, if Exit terminates the agreement due to a franchisee breach or if the franchisee wrongfully terminates the agreement, the subfranchisor can seek recovery for damages sustained before the termination and damages they will sustain in the future as a result of the breach. Because calculating the exact damages for lost prospective fees is difficult, the franchisee agrees to pay liquidated damages. These damages are calculated as the average monthly Continuing Fees paid to the subfranchisor and Exit for the 12 months before termination, multiplied by the number of months remaining until the original expiration date of the agreement.
Moreover, the franchisee is obligated to close all transactions under contract at the time of termination through Exit's proprietary system and pay all company development fees, transaction fees, and regional development fees that are due. If the termination occurs due to non-renewal and all other obligations have been met, Exit will continue to pay out any applicable sponsoring bonuses on the final transactions to the franchisee and its associates if they were with Exit at the time of termination. However, if termination results from a default or other agreed-upon terms, sponsoring bonuses to associates who are no longer with Exit will be paid to the subfranchisor, or if the subfranchisor does not exist, to Exit itself.