Franchise contract is also an ordinary civil contract, and liquidated damages are generally agreed by both parties in advance to fill in the contract. When one party breaches the contract, it will pay a certain amount of liquidated damages to the other party. If there is no agreement, the liquidated damages shall be limited to the actual losses suffered. If the liquidated damages are too high, you can ask the court to reduce the amount of liquidated damages by counterclaim or defense in the lawsuit, which shall not be higher than 30% of the actual losses. If the liquidated damages are too high, the breaching party may request the court to reduce the amount of liquidated damages. Legal Basis: Article 577 If a party fails to perform its contractual obligations or fails to perform its contractual obligations in conformity with the contract, it shall bear the liabilities for breach of contract such as continuing to perform, taking remedial measures or compensating for losses.