What are 'Brand Damages' in the context of a Focalpoint Coaching franchise agreement?
Focalpoint_Coaching Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) If this Agreement is terminated by Franchisee before the Term expires pursuant to Subsections 14.B, 14.D, or 14.E above, then Franchisee acknowledges and confirms that Franchisor will suffer and incur substantial damages because this Agreement did not continue for the Term's full length. Accordingly, Franchisee agrees to pay Franchisor for all damages, costs, expenses, attorneys' and experts' fees directly or indirectly related thereto, including, without limitation, lost Royalties, lost profits, loss of goodwill and damage to the Marks and reputation, lost opportunities, travel and personnel costs, expenses that Franchisor may incur in developing or finding another franchise owner to establish and operate a new FocalPoint Franchised Business in the Territory, and any other lost payments or benefits Franchisor would have received for the balance of the Term after the effective date of termination (collectively, "Brand Damages"). Franchisee further acknowledges and agrees that its obligation to pay Brand Damages resulting from early termination shall be in addition to (not in lieu of) Franchisee's posttermination obligations to pay other amounts due as of the date of termination (as contemplated under the preceding Subsection (1) above) and to otherwise comply with the entirety of Section 15 hereof, and that the Brand Damages shall not be deemed a
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to Focalpoint Coaching's 2025 Franchise Disclosure Document, 'Brand Damages' are defined as the financial losses Focalpoint Coaching incurs if a franchisee terminates the Franchise Agreement before the end of its term.
Specifically, if a Focalpoint Coaching franchisee terminates the agreement early, they acknowledge that Focalpoint Coaching will suffer substantial damages. These damages include, but are not limited to, lost royalties, lost profits, loss of goodwill and damage to the brand's marks and reputation. Brand Damages also cover lost opportunities, travel and personnel costs, and expenses Focalpoint Coaching may incur in finding a new franchisee to operate in the territory. It encompasses any lost payments or benefits Focalpoint Coaching would have received for the remainder of the term.
The FDD clarifies that the franchisee's obligation to pay Brand Damages is in addition to any other amounts owed as of the termination date and is not considered a penalty for early termination. Instead, it is viewed as reasonable compensation to Focalpoint Coaching for the franchisee's failure to fulfill the agreement for the full term.
This clause highlights a significant financial risk for franchisees considering early termination, as they could be liable for a wide range of damages beyond just unpaid royalties or fees. Prospective franchisees should carefully consider the potential financial implications of early termination and seek legal counsel to fully understand their obligations under the Franchise Agreement.