In the event of termination, are the franchisee's owners jointly and severally liable for obligations to Mrcool?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Without limitation to the foregoing, additionally, in the event of the termination of this Agreement as a result of a default or breach by Franchisee and/or, by Franchisee's Owners and/or affiliates of any Ancillary Agreements, Franchisor, in addition to any and all other rights and remedies available to Franchisor as set forth in this Agreement, and, at law and in equity, shall possess the following rights and remedies, each of which are not exclusive of the other and may be/are in conjunction with one another:
(1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
(2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
(3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement.
In calculating and determining the foregoing Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, in the event of a termination due to a default or breach by the franchisee, its owners, or affiliates related to any ancillary agreements, Mrcool has specific rights and remedies. These remedies are not exclusive and can be used in conjunction with each other, as available under the agreement, at law, or in equity.
Specifically, Mrcool has the right to hold the franchisee and the franchisee's owners jointly and severally liable for all payments, fees, monetary obligations, financial obligations, interest, and charges owed to Mrcool. This includes, but is not limited to, royalty fees and advertising contributions. All payments and obligations are accelerated and become immediately due. Mrcool can also recover lost revenues, profits, and fees, including royalty fees, brand development fund fees, advertising contributions, and all other fees and expenses that would have been paid throughout the term of the agreement had the breach not occurred and the agreement not been terminated.
To calculate these damages, the franchisee agrees that it is fair and reasonable to use the franchisee's most recent calendar year gross sales to determine Mrcool's lost revenues and fees. This calculation assumes that such gross sales would have been earned in each year throughout the remainder of the term had the agreement not been terminated. This means that Mrcool can seek to recover the anticipated revenue stream they expected to receive for the remaining duration of the franchise agreement, based on the franchisee's recent sales performance.