What is the effect of an addendum to the Fly To Fit Franchise Agreement on the liquidated damages calculation?

According to Fly To Fit's 2024 Franchise Disclosure Document, the standard calculation of liquidated damages will not be affected by any deferred or reduced Royalty Fees and Marketing Fund Contributions outlined in an addendum to the Franchise Agreement. This means that even if a franchisee has negotiated a temporary reduction in these fees, the liquidated damages will still be calculated based on the original, non-discounted amounts.

However, there is an exception to this rule. If the addendum specifically amends Section 14.5 of the Franchise Agreement (which deals with liquidated damages), then the terms of that amendment will take precedence. This implies that Fly To Fit is willing to negotiate the liquidated damages calculation in certain circumstances, but any changes must be explicitly stated in a written addendum to the agreement.

For a prospective Fly To Fit franchisee, this clause highlights the importance of carefully reviewing any addenda to the Franchise Agreement. While addenda can offer beneficial modifications to the standard terms, it's crucial to understand how they might impact other aspects of the agreement, such as the calculation of liquidated damages in case of termination. If a franchisee negotiates reduced fees, they should also consider negotiating a corresponding adjustment to the liquidated damages clause to avoid paying damages based on the higher, pre-reduction fee amounts.