What happens if the Gokhale Method franchise agreement is terminated before the end of the term?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
If the franchise agreement is terminated before the end of the term, you may be liable for liquidated damages in an amount calculated pursuant to the following formula: (a) the average monthly Royalty fee and Brand Fund Contribution, if any, 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 the franchise agreement.
Source: Item 6 — OTHER FEES (FDD pages 11–13)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, if the franchise agreement is terminated before its natural expiration, the franchisee may be liable for liquidated damages. These damages are calculated based on a formula that considers the average monthly Royalty fee and Brand Fund Contribution, if any, payable by the franchisee.
The calculation involves taking the average monthly Royalty fee and Brand Fund Contribution from the 12 months preceding termination (or a shorter period if the business has been open for less than 12 months). This average is then multiplied by the lesser of either 18 months or the number of months remaining in the franchise agreement's term.
This means that if Gokhale Method terminates the agreement for cause, a franchisee could owe a significant amount, especially if the remaining term is lengthy or if the average monthly fees were substantial. This clause protects Gokhale Method from losses it might incur due to the early termination of the agreement and incentivizes franchisees to adhere to the terms of the agreement.