What happens to the Gokhale Method Franchise Agreement if it is terminated before the end of the term?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
EXPIRATION
Upon termination or expiration of this Agreement for any reason, all rights granted hereunder to you shall forthwith terminate, and:
- 16.1. Cease Operations. You shall immediately cease to operate the Franchised Business, and shall not thereafter, directly or indirectly, represent to the public or hold yourself out as a present or former Gokhale Method Franchised Business. Immediately upon the expiration or termination hereof, you shall dispose of, and not transfer to anyone other than us, any Gokhale Method products, equipment or other items sold hereunder
- 16.2. Cease Use of Confidential Information and Marks. You shall immediately and permanently cease to use, in any manner whatsoever, any of our Intellectual Property, including but not limited to Confidential Information, methods, procedures and techniques associated with the System, and all Marks and distinctive forms, slogans, signs, symbols, colors, and devices associated with the System. In particular, you shall cease to use, without limitation, all signs, advertising materials, displays, stationery, forms, products and any other articles that display the Marks. You shall de-identify the Location of the Franchised Business so that there is no use or display of the Marks after the effective date of termination or expiration.
- 16.3. Cancellation of Registrations. You shall take such action as may be necessary to cancel any assumed name registration or equivalent registration obtained by you which contains the "Gokhale" word, or any other Marks, and you shall furnish us with evidence satisfactory to us of compliance with this obligation within five (5) days after termination or expiration of this Agreement.
- 16.4. Assignment of Lease. You shall, at our option, except in the event you continue to operate any other business you were operating from the same Location assign to us any interest which you have in any lease or sublease for the Location. In the event we do not elect to exercise our option to acquire the lease or sublease for the Location, you shall make such modifications or alterations to the Location (including, without limitation, the changing of, and the assigning to us of, the telephone number) immediately upon termination or expiration of this Agreement as may be necessary to distinguish the appearance of the Location from that of the Franchised Business under the System, and shall make
such specific additional changes thereto as we may reasonably request for that purpose. In the event you fail or refuse to comply with the requirements of this Section 16.4, we shall have the right to enter upon the Location, without being guilty of trespass or any other tort, for the purpose of making or causing to be made such changes as may be required, at the expense of you, which expense you agree to pay upon demand.
- 16.5. Subsequent Use of Marks Prohibited. You agree, in the event you continue to operate or subsequently begin to operate any other business, not to use any reproduction, counterfeit, copy or colorable imitation of the Marks, either in connection with such other business or the promotion thereof, which, in our sole business judgment, is likely to cause confusion, mistake or deception, or which, in our sole business judgment, is likely to dilute our rights in and to the Marks. You further agree not to utilize any designation of origin, description or representation (including but not limited to reference to Gokhale Method Institute, the System or the Marks) which, in our sole business judgment, suggests or represents a present or former association or connection with us, the System or the Marks.
- 16.6. Payment. You shall promptly pay all sums owing to us and our Affiliates. In the event of termination due to your default, such sums shall include all damages, costs, and expenses, including reasonable attorneys' fees, incurred by us as a result of the default, which obligation shall give rise to and remain, until paid in full, a lien in our favor against any and all of the personal property, furnishings, equipment, signs, fixtures, and inventory owned by you and at the Location operated hereunder at the time of default.
- 16.7. Liquidated Damages Upon Termination Due to Your Default. In the event this Agreement is terminated prior to the end of its Term due to your default hereunder, with the exception of default due to death of the franchisee, in addition to the amounts set forth in Section 16.6, above, you shall promptly pay to us a lump sum payment (as damages and not as a penalty) for breaching this Agreement in an amount equal to: (a) the average monthly aggregate of Royalty fee, Brand Fund Contribution (if any) and other Fees or product purchases from us payable by you over the twelve (12) month period immediately preceding 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) eighteen (18) months or (ii) the number of months then remaining in the then-current Term of this Agreement. You acknowledge that a precise calculation of the full extent of the damages we will incur in the event of termination of this Agreement as a result of your default is difficult to determine and that this lump sum payment is reasonable in light of the damages we will incur for your material default causing the premature termination of this Agreement. This lump sum payment shall be in lieu of any damages we may incur as a result of your default, but it shall be in addition to all amounts provided above in Section 16.6 and any attorneys' and accountants' fees and other costs and expenses to which we are entitled under the terms of this Agreement. Your payment of this lump sum shall not affect our right to obtain appropriate injunctive relief and remedies to enforce this Section 16 and the covenants set forth in Section 17.
- 16.8. Return Manuals and Confidential Information. You shall immediately deliver to us the any hard copies of the Teachers' Manual or Policy Statements, as well as any electronic records that contain Confidential Information relating to the operation of the Franchised Business, including, but not limited to, computer software, customer lists, and customer information, all of which are acknowledged to be our property, and shall retain no copy or record of any of the foregoing, with the exception of your copy of this Agreement, any correspondence between the parties and any other documents which you reasonably need for compliance with any provision of law.
- 16.9. Websites and Email. You shall cease use of any of our domain name, URL, email address or home page address, or any such name or address that is confusingly similar to one of ours, and shall not establish any Website using any similar or confusing domain name, URL, and/or home page address.
- 16.10. Our Option to Purchase Equipment. We shall have the option, at our sole discretion, to be exercised within thirty (30) days after termination or expiration, to purchase from you any or all of the equipment, signs, inventory, materials, supplies and fixtures related to the operation of the Franchised Business at fair market value or at sixty percent (60%) of your original investment, whichever is less. if the parties cannot agree within such time on the price of any such items, an independent appraisal
shall be conducted at our expense by an appraiser we select, and the appraiser's determination shall be binding. If we elect to exercise any option to purchase herein provided, it shall have the right to set off all amounts due from you, and the cost of the appraisal, if any, against any payment therefore.
16.11. Compliance With Covenants. You shall comply with the covenants contained in Section 17 of this Agreement.
17. COVENANTS
- 17.1. In-Term Covenants. You specifically acknowledge that, pursuant to this Agreement, you will receive valuable, specialized training and Confidential Information, including, without limitation, information regarding the Gokhale Method and techniques used by us and the System. You covenant that during the Term of this Agreement, except as otherwise approved in writing by us, you shall not, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or legal entity:
- 17.1.1.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, several obligations arise if the Franchise Agreement is terminated before its natural expiration. The franchisee must immediately cease operating the Franchised Business and cannot represent themselves as a current or former Gokhale Method franchisee. They must also dispose of any Gokhale Method products, equipment, or other items, and cannot transfer them to anyone else except Gokhale Method. The franchisee is also required to stop using any of Gokhale Method's intellectual property, including confidential information, methods, trademarks, and slogans.
Additionally, the franchisee must cancel any assumed name registrations containing the word "Gokhale" or any other Gokhale Method marks within five days of termination and provide evidence of compliance. Gokhale Method has the option to have the franchisee assign any lease for the business location to them. If Gokhale Method does not exercise this option, the franchisee must modify the location to differentiate it from a Gokhale Method Franchised Business, including changing the telephone number. The franchisee must also stop using any Gokhale Method domain names, URLs, email addresses, or similar names, and cannot establish any confusingly similar websites.
Furthermore, Gokhale Method has the option to purchase the franchisee's equipment, signs, inventory, materials, supplies, and fixtures at fair market value or 60% of the original investment, whichever is less. The franchisee must also comply with the non-compete covenants outlined in Section 17 of the agreement, which restrict the franchisee from engaging in any competitive business within a 10-mile radius of their former location or any existing Gokhale Method location for two years. If the agreement is terminated due to the franchisee's default, they must pay Gokhale Method a lump sum payment as damages, calculated based on the average monthly royalties, brand fund contributions, and other fees over the preceding 12 months, multiplied by the lesser of 18 months or the remaining months in the agreement term. This payment is in addition to other amounts owed and does not affect Gokhale Method's right to seek injunctive relief.