What constitutes a constructive termination of the All Dogs Unleashed franchise agreement that would trigger liquidated damages?

According to All Dogs Unleashed's 2025 Franchise Disclosure Document, a franchisee constructively terminates the franchise agreement, which triggers the payment of liquidated damages, by ceasing operations. If a franchisee terminates the agreement without proper justification, this also triggers the liquidated damages clause.

If All Dogs Unleashed terminates the agreement for cause, or if the franchisee constructively terminates the agreement by ceasing operations or affirmatively terminates the agreement without justification, the franchisee must pay liquidated damages to All Dogs Unleashed. These damages are calculated as the average monthly Royalty Fee for the 12 months immediately preceding termination, multiplied by the number of months remaining in the current term or four years, whichever is less, discounted to present value.

This clause is designed to compensate All Dogs Unleashed for the lost future revenue and profits they would have received had the franchisee continued to operate the business for the full term of the agreement. The liquidated damages provision aims to protect All Dogs Unleashed's interests in maintaining a stable and consistent franchise network. Prospective franchisees should carefully consider this clause and understand the financial implications of terminating the agreement early or ceasing operations, as it could result in a significant financial obligation to All Dogs Unleashed.