When does the liquidated damages clause apply to a terminated Canine Dimensions franchise agreement?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The Franchise Agreement contains a liquidated damages clause. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
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Minn. Rule Part 2860.4400J. prohibits a franchisee from waiving his rights to a jury trial or waiving his rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction, or consenting to liquidated damages, termination penalties or judgment notes.
Any provision in the Agreement which would require you to waive your rights to any procedure, forum or remedies provided for by the laws of the State of Minnesota is deleted from any Agreement relating to franchises offered and sold in the State of Minnesota; provided, however, that this paragraph will not affect the obligation in the Agreement relating to arbitration.
The parties agree that for the purposes of Section 20022(h), our right of offset will include the following amounts owed by you to us or our Affiliates: a) Royalty Fees; b) Liquidated Damages; c) Transfer Fees; and d) any other type of fee owed by you to us or our Affiliates.
Source: Item 22 — CONTRACTS (FDD page 36)
What This Means (2025 FDD)
According to Canine Dimensions's 2025 Franchise Disclosure Document, the Franchise Agreement contains a liquidated damages clause. However, the enforceability of this clause is subject to state-specific regulations. In California, for example, under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
For franchisees in Minnesota, the addendum to the Franchise Agreement states that franchisees cannot consent to liquidated damages. Any provision in the Agreement which would require a franchisee to waive their rights to any procedure, forum or remedies provided for by the laws of the State of Minnesota is deleted from any Agreement relating to franchises offered and sold in the State of Minnesota; however, this does not affect the obligation in the Agreement relating to arbitration.
For franchisees in California, the parties agree that for the purposes of Section 20022(h), Canine Dimensions's right of offset will include the following amounts owed by the franchisee to Canine Dimensions or its Affiliates: a) Royalty Fees; b) Liquidated Damages; c) Transfer Fees; and d) any other type of fee owed by the franchisee to Canine Dimensions or its Affiliates. Prospective franchisees should seek legal counsel to understand the specific conditions under which the liquidated damages clause may be applied and enforced in their state, considering these state-specific addenda and applicable laws.