What are the franchisee's obligations upon termination or expiration of the Nothing Bundt Cakes franchise agreement, as outlined in Article 15?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
est efforts to promote and increase the demand for the products and services offered by your Bakery. All of your advertising and promotional efforts must be completely factual and conform to the highest standards of ethical advertising. You agree to refrain from any business or advertising practice that may be injurious to the Bakery or the goodwill associated with the Marks and System.
6.10 Telephone.
You must obtain a new telephone number and telephone listing at your expense, to be listed under the Nothing Bundt Cakes® name and not under your corporate, partnership, or individual name, to be used exclusively in connection with your operation of the Bakery. Upon the expiration, transfer or termination of this Agreement for any reason, you must terminate your use of such telephone number(s) and listing(s) and assign same to us or our designee. You must answer the telephone in the manner we specify in the Operations Manual. You agree to assign all telephone numbers, fax numbers, and other numbers or listings associated with the Bakery to us, including all Better Business Bureau, Angie's List, Yahoo, Google, Craigslist, Facebook, YouTube, Plaxo and related listings by signing the assignment of telephone numbers attached as Exhibit 5 to this Agreement. You hereby grant us permission to access your telephone data for any purpose we deem relevant and do to so directly through you or your vendor. We have the right to require you, at your sole expense, to enter into separate agreements with our designated vendors for the Bakery's telephone equipment and service. If we choose to operate a centralized answering service for the System, you will be required to participate in such service and take all actions necessary for such participation, including the forwarding of calls to the service.
6.11 Your Obligations; Payment of Debts.
You are solely responsible for: (a) selecting, retaining and paying your employees and complying with all state, federal, and local employment laws and regulations, including, without limitation, those related to hiring, firing, training, wage and hour requirements, compensation, promotion, record-keeping, data privacy and security, supervision, and discipline of employees, paid or unpaid, full or part-time; (b) paying all invoices for goods and services used in connection with operating the Bakery; and (c) determining whether, and on what terms, to obtain any financing or credit which you deem advisable or necessary to establish and operate the Bakery. You agree to pay all current obligations and liabilities to suppliers, lessors, and creditors on a timely basis. You agree to indemnify us in the event we are held responsible for your debts if we elect to pay your obligations in order to preserve the relationship between
System Suppliers and other System franchisees. You agree to make prompt payment of all federal, state and local taxes, including individual and corporate taxes, sales and use taxes, franchise taxes, gross receipts taxes, employee withholding taxes, FICA taxes, personal property and real estate taxes arising from your operation of the Bakery. You agree to indemnify us if we are held responsible for these taxes.
6.12 Compliance with Applicable Laws.
You must comply with all applicable federal, state and local laws, ordinances and regulations (including, without limitation, all government regulations relating to the preparation, presentation, shipping, delivery and disposal of perishable goods, kitchen safety, occupational hazards and health, dispensing of perishable items, consumer protection, trade regulation, worker's compensation, unemployment insurance, withholding and payment of federal and state income taxes and social security taxes and sales, use and property taxes, and the applicable provisions of the Americans with Disabilities Act ("ADA")) regarding the construction, design and operation of the Bakery. You also agree to comply with all applicable laws pertaining to the privacy of the customer, employee, and transactional information ("Privacy Laws").
Source: Item 23 — RECEIPTS (FDD pages 93–309)
What This Means (2025 FDD)
According to the 2025 Nothing Bundt Cakes Franchise Disclosure Document, upon termination or expiration of the franchise agreement, a franchisee has specific obligations detailed in Section 6.10. The franchisee must terminate the use of the telephone number and listing associated with the bakery and assign them to Nothing Bundt Cakes or their designee. This includes assigning all telephone numbers, fax numbers, and other numbers or listings associated with the Bakery to Nothing Bundt Cakes, including all Better Business Bureau, Angie's List, Yahoo, Google, Craigslist, Facebook, YouTube, Plaxo and related listings by signing the assignment of telephone numbers attached as Exhibit 5 to the Agreement.
Additionally, Section 15.5 outlines liquidated damages the franchisee must pay if the agreement is terminated before its term expires. The franchisee acknowledges that Nothing Bundt Cakes will suffer substantial damages, referred to as "Brand Damages," including lost royalties, marketing contributions, lost goodwill, and damage to their marks. Because these damages are difficult to estimate, the franchisee agrees to pay liquidated damages within fifteen days of termination. This lump sum is calculated by multiplying the average Royalties, Marketing Production Fund contributions, and Paid Media Fund contributions (collectively, "Royalties and Contributions") that the franchisee was obligated to pay for each four-week period during the twenty-four months of operation preceding termination, by twenty-six (the number of four-week periods during two full years) or the number of weeks remaining in the term, whichever is shorter.
However, the liquidated damages payable will not exceed $125,000 per bakery. If a franchisee operates multiple units and more than one franchise agreement is terminated for cause, the franchisee will owe liquidated damages for each terminated franchise agreement. This provision ensures that Nothing Bundt Cakes is compensated for the losses incurred due to early termination, while also setting a cap on the amount a franchisee must pay. This is a fairly standard practice in franchising, as it protects the brand from financial losses due to early termination.