What is the minimum amount of liquidated damages that Canine Dimensions will be entitled to?
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.
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)
Based on the 2025 Canine Dimensions Franchise Disclosure Document, the agreement contains a liquidated damages clause. However, the enforceability of such clauses is subject to California Civil Code Section 1671, which may render certain liquidated damages clauses unenforceable. This means that while the Franchise Agreement includes provisions for liquidated damages, their actual application and the minimum amount recoverable may be limited or disallowed under California law.
For prospective franchisees, this implies that the ability of Canine Dimensions to claim liquidated damages may be restricted. It is important to understand the specific conditions under which liquidated damages can be enforced, as outlined in the Franchise Agreement and in accordance with California Civil Code Section 1671. Franchisees should seek legal counsel to fully understand their rights and obligations regarding liquidated damages.
Furthermore, in the context of Cal. Bus. & Prof. Code Section 20022, Canine Dimensions retains the right to offset amounts owed by the franchisee, which includes liquidated damages, against any payments due to the franchisee. This offset provision allows Canine Dimensions to deduct liquidated damages from any payments owed to the franchisee, providing a mechanism for recovering such damages, subject to the limitations imposed by California law. Franchisees should be aware of this offset right and how it may affect their financial obligations and potential liabilities under the Franchise Agreement.