What is the minimum royalty used in the liquidated damages calculation for a Canine Dimensions franchise?
Canine_Dimensions Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Franchise Disclosure Document, the Canine Dimensions Franchise Agreement contains a liquidated damages clause. In California, certain liquidated damages clauses are unenforceable under California Civil Code Section 1671. The parties agree that for the purposes of Section 20022(h), Canine Dimensions' right of offset will include amounts owed such as Royalty Fees and Liquidated Damages.
The FDD does not specify the exact formula or percentage used to calculate liquidated damages, nor does it state the minimum royalty used in the liquidated damages calculation.
Prospective franchisees should carefully review the Franchise Agreement with a legal professional to fully understand the implications of the liquidated damages clause and how royalties factor into that calculation. It is important to understand the circumstances under which liquidated damages may be assessed and the potential financial impact on the franchisee.