Does the Caring Transitions agreement specify that the liquidated damages payment is not exclusive of equitable remedies?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
The parties agree that the full extent of the damages that Franchisor will incur if a Covenantor fails to comply with their obligations under section 3 or 4 is difficult to ascertain, but the parties nevertheless desire certainty in this matter.
Accordingly, if a Covenantor breaches or fails to comply with any of the provisions of section 3 or 4, they shall pay Franchisor, as liquidated damages and not as a penalty, a royalty equal to 15% of the gross amount of all income, sales, salary, wages, fees, dividends, distributions, and other compensation received or earned by Covenantor or any Covered Person, or to which any of those parties becomes entitled, as the result of the breach or noncompliance.
The parties further agree that the royalty required by this paragraph is reasonable in light of the damages that Franchisor will incur.
This payment is not exclusive of any other remedies that Franchisor may have, including equitable remedies, attorneys' fees, and costs.
Source: Item 23 — RECEIPT (FDD pages 49–202)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the liquidated damages payment is not the only recourse available to the franchisor. Specifically, if a franchisee (or "Covenantor") breaches the non-compete or confidentiality obligations outlined in sections 3 or 4 of the agreement, they must pay Caring Transitions a royalty equal to 15% of the income they earned as a result of the breach.
This royalty payment is considered liquidated damages, intended to compensate Caring Transitions for the losses they incur due to the franchisee's non-compliance. The FDD states that the parties agree this royalty is reasonable considering the potential damages to Caring Transitions.
However, the agreement explicitly states that this payment does not prevent Caring Transitions from pursuing other remedies. These other remedies can include equitable relief, such as an injunction to stop the franchisee from continuing the prohibited behavior, as well as recovering attorneys' fees and costs associated with enforcing the agreement. This means Caring Transitions has multiple avenues for recourse if a franchisee violates the terms of the agreement.