What fees are used to calculate the liquidated damages for an Itan franchise?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Liquidated Damages: You must pay us liquidated damages if: (a) we terminate the Franchise Agreement due to your default; or (b) you terminate the Franchise Agreement prior to its expiration date (except in accordance with the provisions governing your right to terminate following our uncured breach). Liquidated damages are calculated as the sum of average weekly royalty fees and brand fund fees imposed during the 52-week period preceding termination (or your entire period of operation if less than 52-weeks) multiplied by the lesser of: (a) 104 (representing 2 years of fees); or (b) the total number of weeks remaining under the term. If you pay us liquidated damages in a timely manner, we may not pursue a claim against you for lost profits. However, payment of liquidated damages does not prevent us from seeking other damages we incur due to your breach.
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, liquidated damages are calculated using average weekly royalty fees and brand fund fees. If Itan terminates the Franchise Agreement due to the franchisee's default, or if the franchisee terminates the agreement before its expiration (except in cases of Itan's uncured breach), the franchisee must pay liquidated damages.
The liquidated damages are calculated by summing the average weekly royalty fees and brand fund fees from the 52-week period preceding the termination. If the franchise operated for less than 52 weeks, the calculation uses the entire period of operation. This sum is then multiplied by the lesser of 104 (representing two years of fees) or the total number of weeks remaining under the franchise term.
If the franchisee pays the liquidated damages promptly, Itan may not pursue a claim for lost profits. However, payment of liquidated damages does not prevent Itan from seeking other damages resulting from the franchisee's breach. This means that while paying liquidated damages might protect the franchisee from a lost profits claim, Itan retains the right to pursue additional claims for other damages incurred due to the breach of the agreement.