If a Pearce Bespoke franchisee violates confidentiality or non-competition covenants, what is the liquidated damages amount they must pay the franchisor?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
ctive relief will be entered by a court of competent jurisdiction enforcing the non-competition covenants without Franchisor posting any bond or security, in addition to all other remedies that may be available to Franchisor at equity or law.
E. Liquidated Damages – Violation of Confidentiality or Non-Competition Covenants. In the event Franchisee violates the covenants of confidentiality and/or non-competition set forth herein, Franchisee shall pay Franchisor a lump sum payment (as liquidated damages and not as a penalty) an amount equal to One Hundred Thousand Dollars ($100,000.00), plus Franchisor's attorney's fees, for each such violation. Franchisee acknowledges that a precise calculation of the full extent of the damages that Franchisor will incur in the event of Franchisee's violation of the covenants of confidentiality and/or non-competition is difficult to determine and that this lump sum payment is reasonable in light thereof. The liquidated damages payable
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, a franchisee who violates confidentiality or non-competition covenants must pay the franchisor a lump sum of $100,000.00, plus the franchisor's attorney's fees, for each violation. This payment is considered liquidated damages and not a penalty. Pearce Bespoke states that precisely calculating the full extent of damages from such a violation is difficult, making this lump sum reasonable.
This liquidated damages payment is in addition to any other amounts the franchisee owes under the Franchise Agreement. It also does not affect Pearce Bespoke's right to seek injunctive relief and other remedies. Injunctive relief allows Pearce Bespoke to seek a court order to stop the franchisee from continuing the violating behavior.
This clause highlights the importance Pearce Bespoke places on protecting its confidential information and maintaining fair competition within its franchise system. The substantial liquidated damages amount serves as a deterrent against violating these covenants. Prospective franchisees should understand that breaches of confidentiality or non-competition agreements can result in significant financial penalties, in addition to potential legal action.