How are liquidated damages calculated for early termination of an Hck Hot Chicken franchise agreement?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
der the Area Development Agreement.
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- Liquidated Damages. Liquidated damages are determined by multiplying the combined monthly average of Continuing Royalties and Brand Fund Contributions (without regard to any fee waivers or other reductions) that are owed by you to us, beginning with the date you open your HCK Hot Chicken Restaurant through the date of early termination, multiplied by the lesser of: 36; or (ii) the number of months remaining in the term of the Franchise Agreement, except that liquidated damages will not, under any
Source: Item 6 — OTHER FEES (FDD pages 13–19)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, liquidated damages are determined by a specific formula in the event that Hck Hot Chicken terminates the franchise agreement early due to the franchisee's violation of non-competition terms.
The calculation involves multiplying the combined monthly average of Continuing Royalties and Brand Fund Contributions, from the restaurant's opening date through the termination date, by a multiplier. This multiplier is the lesser of 36 or the number of months remaining in the franchise term.
Importantly, the liquidated damages will not be less than $30,000 under any circumstances. This means that even if the calculated amount based on the formula is lower, the franchisee will still owe Hck Hot Chicken a minimum of $30,000. This provision protects Hck Hot Chicken's interests in the event of early termination due to a franchisee's violation of the non-competition agreement.