What specific language is added to the Itan Disclosure Document, the Franchise Agreement, and Supplemental Agreements regarding liquidated damages and termination penalties for Indiana franchises?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
Liquidated damages and termination penalties are prohibited by law in the State of Indiana and, therefore, the Disclosure Document, the Franchise Agreement and Supplemental Agreements are amended by the deletion of all references to liquidated damages and termination penalties and the addition of the following language to the original language that appears therein:
Notwithstanding any such termination, and in addition to the obligations of the franchisee as otherwise provided, or in the event of termination or cancellation of the Franchise Agreement under any of the other provisions therein, the franchisee nevertheless shall be, continue and remain liable to franchisor for any and all damages which franchisor has sustained or may sustain by reason of such default or defaults and the breach of the Franchise Agreement on the part of the franchisee for the unexpired Term of the Franchise Agreement.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to the 2025 Itan Franchise Disclosure Document, Indiana law prohibits liquidated damages and termination penalties. Therefore, for franchises in Indiana, the Disclosure Document, the Franchise Agreement, and Supplemental Agreements are amended to remove all references to these penalties. However, the following language is added to the original language that appears in those documents:
"Notwithstanding any such termination, and in addition to the obligations of the franchisee as otherwise provided, or in the event of termination or cancellation of the Franchise Agreement under any of the other provisions therein, the franchisee nevertheless shall be, continue and remain liable to franchisor for any and all damages which franchisor has sustained or may sustain by reason of such default or defaults and the breach of the Franchise Agreement on the part of the franchisee for the unexpired Term of the Franchise Agreement."
This means that even if the Itan franchise agreement is terminated, the franchisee remains liable to Itan for damages resulting from their default or breach of contract for the remainder of the franchise term. The franchisee is obligated to compensate Itan for losses and expenses, including attorney's fees, incurred due to the franchisee's actions or failure to meet contractual obligations. This clause ensures that Itan can seek compensation for financial harm caused by a franchisee's breach, even after the franchise agreement has ended.