How is the number of weeks used in the liquidated damages calculation for Itan determined?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
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 imposed if the Franchise Agreement is terminated either by Itan due to the franchisee's default, or by the franchisee before the agreement's expiration, unless the franchisee is terminating due to Itan's uncured breach. The liquidated damages calculation involves multiplying the average weekly royalty and brand fund fees by a certain number of weeks.
The number of weeks used in this calculation is the lesser of two figures: 104 weeks (representing two years of fees) or the total number of weeks remaining under the franchise term. This means that Itan aims to recover the equivalent of either two years' worth of royalty and brand fund fees or the fees due for the entire remaining duration of the franchise agreement, whichever is shorter.
This approach to liquidated damages is fairly common in franchising, as it attempts to compensate the franchisor for the anticipated future revenue lost due to the early termination of the agreement. However, the franchisee should be aware that even after paying liquidated damages, Itan retains the right to pursue additional claims for other damages incurred as a result of the franchisee's breach. This could potentially expose the franchisee to further financial liabilities beyond the liquidated damages amount.