What damages are NOT covered by the liquidated damages payment from a Fly To Fit franchisee?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee's payment to Fly To Fit Franchise under this Section will be in lieu of any direct monetary damages that Fly To Fit Franchise may incur as a result of Fly To Fit Franchise's loss of Royalty Fees and Marketing Fund Contributions that would have been owed to Fly To Fit Franchise after the date of termination; however, such payment shall be in addition to all damages and other amounts arising under Section 14.3 and Section 14.4, Fly To Fit Franchise's right to injunctive relief for enforcement of Article 13, and any attorneys' fees and other costs and expenses to which Fly To Fit Franchise is entitled under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the liquidated damages payment from a franchisee does not cover all potential damages. The lump sum payment is intended to compensate Fly To Fit for the loss of future royalty fees and marketing fund contributions that would have been owed after the termination date. However, this payment is specifically stated to be in addition to other financial obligations.
Specifically, the liquidated damages do not cover damages and other amounts arising under Section 14.3 and Section 14.4 of the franchise agreement. It also does not cover Fly To Fit's right to injunctive relief for enforcement of Article 13, which pertains to covenants within the agreement. Furthermore, the payment does not include any attorneys' fees and other costs and expenses that Fly To Fit is entitled to under the agreement.
In practical terms, this means that even after paying the liquidated damages, a franchisee could still be liable for additional financial penalties and legal expenses resulting from the termination. A prospective Fly To Fit franchisee should carefully review Sections 14.3 and 14.4, Article 13, and the provisions regarding attorneys' fees to fully understand the potential scope of their financial exposure upon termination.