Under what condition can Fitstop claim expectation or consequential damages from a Fitstop franchisee?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
Nothing in this Section or any other provision of this Agreement shall be construed to prevent us from claiming and obtaining expectation or consequential damages, including lost future royalties for the balance of the term of this Agreement if it is terminated due to your default, which the parties agree and acknowledge we may claim under this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop retains the right to claim expectation or consequential damages, including lost future royalties, from a franchisee if the Franchise Agreement is terminated due to the franchisee's default. This means that if a Fitstop franchisee breaches the terms of the agreement and Fitstop terminates the agreement as a result, Fitstop can seek compensation for the anticipated future profits and other losses they expect to incur as a result of the termination.
This clause is significant for prospective franchisees because it outlines a potentially substantial financial risk. If a franchisee fails to meet their obligations under the agreement, they could be liable not only for immediate damages but also for the longer-term financial impact on Fitstop. This could include lost royalties that Fitstop would have received over the remaining term of the agreement.
It is important for potential Fitstop franchisees to fully understand the terms of the Franchise Agreement and the potential consequences of default. Franchisees should carefully consider their ability to meet the obligations outlined in the agreement and seek legal counsel to fully understand their rights and responsibilities. This clause highlights the importance of diligent operation and adherence to the franchise agreement to avoid potential financial liabilities.