Does the liquidated damages payment affect Fly Fitness's right to obtain injunctive relief?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.1.8. in the event this Agreement is terminated due to Franchisee's default, pay Franchisor a lump sum payment (as liquidated damages and not as a penalty) in an amount equal to: (a) the average weekly Royalty Fee and Brand Fund Contribution payable by Franchisee over the twelve (12) month period immediately prior to the date of termination (or such shorter time period if the Franchised Business has been open less than twelve (12) months); (b) multiplied by the lesser of (i) twenty-four (24) months or (ii) the number of months then remaining in the then-current term of this Agreement. Franchisee acknowledges that a precise calculation of the full extent of the damages Franchisor will incur in the event of termination of this Agreement as a result of Franchisee's default is difficult to determine and that this lump sum payment is reasonable in light thereof. The liquidated damages payable by Franchisee pursuant to this Section 18.1.8 shall be in addition to all other amounts payable under this Agreement and shall not affect Franchisor's right to obtain appropriate injunctive relief and remedies pursuant to any other provision of this Agreement; and
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the liquidated damages payable by a franchisee do not affect Fly Fitness's right to obtain injunctive relief. Specifically, the FDD states that the liquidated damages payment is in addition to all other amounts payable under the agreement and does not affect Fly Fitness's right to seek injunctive relief and remedies under any other provision of the agreement. This means that even if a franchisee pays liquidated damages, Fly Fitness still retains the right to pursue injunctive relief if the franchisee violates the franchise agreement. Injunctive relief is a court order that requires a party to do or cease doing a specific action.
This provision is important for prospective franchisees to understand because it clarifies that paying liquidated damages does not shield them from further legal action by Fly Fitness. If a franchisee breaches the agreement, Fly Fitness can pursue both monetary compensation (liquidated damages) and a court order to stop the franchisee from continuing the harmful behavior (injunctive relief). This is a stronger position for Fly Fitness compared to only being able to collect damages.
For example, if a Fly Fitness franchisee defaults on the agreement and opens a competing fitness studio nearby, Fly Fitness could seek both liquidated damages to cover their financial losses and an injunction to prevent the former franchisee from operating the competing business. This dual approach provides Fly Fitness with more comprehensive protection of its brand and business interests.