What is the 'Franchisee's default' referring to in the context of the Monicals Pizza FDD?

According to the 2025 Monicals Pizza Franchise Disclosure Document, a 'default of Franchisee' refers to any failure by the franchisee to meet the obligations outlined in the Franchise Agreement. If the franchise agreement is terminated due to any default by the franchisee, the franchisee is obligated to pay all sums owing to Monicals Pizza and any of its affiliates. These sums include, but are not limited to, damages, costs, expenses, reasonable attorneys' fees related to litigation, arbitration, appellate, or bankruptcy proceedings, unpaid Royalty Fees, loss of future royalty Fee payments incurred by Monicals Pizza as a result of the early termination, and any other amounts due to Monicals Pizza or its affiliates.

In the event of a default, Monicals Pizza aims to recoup any financial losses and ensure compliance with the franchise agreement's terms. This includes not only outstanding payments but also compensation for the projected future royalties that Monicals Pizza would have received had the agreement not been terminated early. The franchisee is also responsible for covering all legal costs incurred by Monicals Pizza in enforcing the agreement following the termination.

This clause highlights the importance of franchisees adhering to the terms of the franchise agreement. Failure to do so can result in significant financial penalties beyond the immediate outstanding amounts. Prospective franchisees should carefully review the franchise agreement to understand their obligations and the potential consequences of failing to meet them. Understanding these financial implications is crucial for assessing the risks associated with investing in a Monicals Pizza franchise.