What constitutes the Early Termination Damages for a My Salon Suite franchise, and are they considered a penalty?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Early Termination Damages. If Franchisor terminates this Franchise Agreement as a result of Franchisee's breach, Franchisee and Franchisor agree that the amount of damages which Franchisor would incur for any such early termination would be difficult, if not impossible, to accurately ascertain. Accordingly, within thirty (30) days following such termination, Franchisee shall pay Franchisor an amount equal to the greater of (i) the average monthly Royalty Fees and Brand Building Fund Contributions that Franchisee owed to Franchisor for the past twenty- four (24) months multiplied by the lesser of thirty-six (36) or the number of months remaining in the Term; or (ii) the average monthly Royalty Fees and Fund Contributions paid by all franchised My Salon Suite businesses who have operated for the past twenty-four (24) months multiplied by the lesser of thirty-six (36) or the months remaining in the Term ("Early Termination Damages"). If Franchisee has not operated the Franchised Business for twenty-four (24) months prior to the termination of this Franchise Agreement, the Early Termination Damages will be calculated by using the average monthly Royalty Fees and Fund Contributions from all franchised My Salon Suite businesses who have operated for the past twenty-four (24) months multiplied by thirty-six (36). These Early Termination Damages shall constitute liquidated damages and are not to be construed as a penalty and shall be the joint and several liability of Franchisee and each of Franchisee's Owners who personally guarantee Franchisee's obligations under this Franchise Agreement.
Source: Item 23 — RECEIPTS (FDD pages 95–230)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, Early Termination Damages are calculated if the Franchisor terminates the Franchise Agreement due to the Franchisee's breach. The franchisee will have to pay My Salon Suite an amount equal to the greater of two calculations. The first calculation is the average monthly Royalty Fees and Brand Building Fund Contributions that the franchisee owed to My Salon Suite for the past 24 months, multiplied by the lesser of 36 or the number of months remaining in the term. The second calculation is the average monthly Royalty Fees and Fund Contributions paid by all franchised My Salon Suite businesses who have operated for the past 24 months, multiplied by the lesser of 36 or the months remaining in the Term.
If the franchisee has not operated the franchised business for 24 months prior to termination, the Early Termination Damages will be calculated using the average monthly Royalty Fees and Fund Contributions from all franchised My Salon Suite businesses who have operated for the past 24 months, multiplied by 36.
The FDD states that these Early Termination Damages constitute liquidated damages and are not to be construed as a penalty. They are the joint and several liability of the franchisee and each of the franchisee's owners who personally guarantee the franchisee's obligations under the Franchise Agreement. My Salon Suite states that the Early Termination Damages are a reasonable estimation of the damages that My Salon Suite would incur if the Franchise Agreement is prematurely terminated.