How is the amount of liquidated damages calculated for All Dogs Unleashed?
All_Dogs_Unleashed Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1 | Amount | Due Date | Remarks | |
|---|---|---|---|---|
| Enforcement Costs and Attorneys’ Fees | Actual fees incurred | Payable as incurred | Payable only if we incur a loss related to your operation of the Facility. | |
| Indemnification | Amount of loss suffered | Upon demand | You must reimburse us and pay our attorneys’ fees and related costs if we incur a loss relating to your operation of the Franchised Business. | |
| Insurance | Reimbursement of premium costs plus an administrative fee of 15% | Upon demand | Payable only if you fail to maintain minimum insurance coverage and we elect to procure insurance on your behalf. | |
| Liquidated Damages | 4 years’ worth of projected Royalty Fees | On our termination based upon your material default. | Payable only if you prematurely cease operations or wrongfully terminate the franchise agreement, or if we terminate the franchise agreement for cause. |
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 12–16)
What This Means (2025 FDD)
According to the 2025 All Dogs Unleashed FDD, liquidated damages are calculated as four years' worth of projected royalty fees. This amount is payable if the franchisee prematurely ceases operations, wrongfully terminates the franchise agreement, or if All Dogs Unleashed terminates the franchise agreement for cause.
This means that if a franchisee breaches the franchise agreement in a way that leads to termination, they could be liable for a significant sum, representing the royalties All Dogs Unleashed expected to receive over the subsequent four years. This is a substantial financial risk for franchisees, as it could amount to a considerable debt on top of any losses already incurred from the failed business.
It is important for prospective All Dogs Unleashed franchisees to understand the implications of this liquidated damages clause. They should carefully consider the factors that could lead to a default and the potential financial consequences. Understanding how projected royalty fees are calculated and what assumptions are used is also crucial. Franchisees should seek legal counsel to fully understand this clause and negotiate more favorable terms if possible.