When is the Fly To Fit liquidated damages fee due?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Liquidated damages | An amount equal to royalty fees and marketing fund contributions for the lesser of (i) 2 years or (ii) the remaining weeks of the franchise term. | On demand | Payable if we terminate your franchise agreement because of your default, or if you terminate the franchise agreement without the right to do so. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, the liquidated damages fee is due 'on demand.' This means Fly To Fit requires immediate payment of the fee once it is assessed.
The liquidated damages fee is imposed if Fly To Fit terminates the franchise agreement due to the franchisee's default or if the franchisee terminates the agreement without proper authorization. The amount of the liquidated damages is equivalent to the royalty fees and marketing fund contributions that Fly To Fit would have collected for either two years or the remaining duration of the franchise term, whichever is less.
This fee structure is designed to compensate Fly To Fit for the anticipated future revenue they lose due to the early termination of the franchise agreement. Prospective franchisees should understand that terminating the agreement early or being in default can result in a significant financial penalty, potentially encompassing two years' worth of royalty and marketing fund payments.