What is included in the calculation of 'Royalties and Contributions' for determining liquidated damages for a Nothing Bundt Cakes franchise?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
ies (and their owners) acknowledge and agree that it would be impracticable to determine precisely the Brand Damages we will incur from this Agreement's termination and the loss of cash flow from Royalties and Contributions (as defined below) due to, among other things, the complications of determining how much Net Revenues would have grown over what would have been the remaining term of this Agreement., Therefore, upon termination of this Agreement before the term expires for any reason you agree to pay us, within fifteen (15) days after the effective date of this Agreement's termination, liquidated damages in a lump sum equal to the product of the average Royalties, Marketing Production Fund contributions and Paid Media Fund contributions (collectively, "Royalties and Contributions") that you were obligated to pay us on the Bakery's Net Revenues for each four (4) week period during the twenty-four (24) months of operation preceding such effective date of termination, multiplied by twenty-six (26) (the number of four-week periods during two (2) full years) or the number of weeks that would have remained in the term of this Agreement (as of the effective date of termination) had it not been terminated, whicheve
Source: Item 23 — RECEIPTS (FDD pages 93–309)
What This Means (2025 FDD)
According to Nothing Bundt Cakes's 2025 Franchise Disclosure Document, the calculation of 'Royalties and Contributions' for liquidated damages includes the average Royalties, Marketing Production Fund contributions, and Paid Media Fund contributions. This calculation is based on what the franchisee was obligated to pay on the Bakery's Net Revenues for each four-week period during the 24 months preceding the termination date.
This average is then multiplied by 26 (the number of four-week periods in two years) or the number of four-week periods remaining in the franchise agreement's term, whichever is shorter. This calculation determines the lump sum the franchisee must pay as liquidated damages if the agreement is terminated before its expiration.
However, the FDD stipulates that the liquidated damages payable will not exceed $125,000 per Bakery. This cap provides some limitation to the financial exposure of the franchisee in the event of early termination. The document also clarifies that if a multi-unit operator has multiple franchise agreements terminated for cause, they will owe liquidated damages for each terminated agreement.