What is the deadline for paying liquidated damages to The Standardx upon termination of the Franchise Agreement?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination of the Franchise Agreement before the term expires for any reason (subject to Article X of the Franchise Agreement), you must pay us, within 15 days after the date of that termination, liquidated damages in a lump sum equal to (a) the lesser of 36 or the number of months then remaining in the Franchise Agreement term had it not been terminated, multiplied by (b) the sum of (i) the Average Monthly Revenue times 5% for lost future Royalty Fees, plus (ii) the Average Monthly Revenue times 3.5% for lost future System Services Charges.
Source: Item 6 — Other Fees (FDD pages 20–36)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, if the Franchise Agreement is terminated before its term expires for any reason (subject to Article X of the Franchise Agreement), the franchisee must pay liquidated damages within 15 days after the termination date. This payment must be made in a lump sum.
The amount of these liquidated damages is calculated based on a formula that considers the remaining months in the Franchise Agreement and the Average Monthly Revenue. Specifically, it involves multiplying the lesser of 36 or the number of months remaining in the agreement by the sum of 5% of the Average Monthly Revenue (for lost future Royalty Fees) and 3.5% of the Average Monthly Revenue (for lost future System Services Charges).
Average Monthly Revenue is determined based on the hotel's performance. If the hotel has been open for at least 36 months, it is the average monthly Gross Rooms Revenue over the 12 months preceding termination. If the hotel has not yet opened, it is based on the average monthly Gross Rooms Revenue per available guest room for all Brand Hotels in the United States. If the hotel has been open for less than 36 months, it is the greater of the amount calculated as if the hotel had not yet opened, or the average monthly Gross Rooms Revenue from the hotel's opening date to the termination date. This calculation can be adjusted if the Average Monthly Revenues were negatively impacted by certain events.