Are the liquidated damages paid to All Dogs Unleashed considered a penalty?
All_Dogs_Unleashed Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.9 Payment of Liquidated Damages. If Franchisor terminates this Agreement for cause, or if you constructively terminate this Agreement by ceasing operations or affirmatively terminate this Agreement without justification, you shall pay to Franchisor, as liquidated damages and not as a penalty, damages in an amount equal to the average monthly Royalty Fee for the 12-month period immediately preceding termination, multiplied by the number of months remaining in the current Term or four years, whichever is less, discounted to present value.
Source: Item 23 — RECEIPTS (FDD pages 49–158)
What This Means (2025 FDD)
According to the 2025 All Dogs Unleashed Franchise Disclosure Document, if the franchise agreement is terminated either by All Dogs Unleashed for cause, or by the franchisee without justification, the franchisee must pay liquidated damages to All Dogs Unleashed. These liquidated damages are explicitly stated not to be a penalty.
The amount of these damages is calculated based on the average monthly Royalty Fee for the 12 months preceding termination. This average is then multiplied by the number of months remaining in the current term, or four years, whichever is less. The resulting amount is then discounted to present value.
This clause aims to compensate All Dogs Unleashed for the anticipated future royalty fees they would have received had the franchise agreement remained in effect. By explicitly stating that the damages are not a penalty, All Dogs Unleashed is attempting to ensure the enforceability of this provision in the event of a dispute.