What is the deadline for a Caring Transitions franchisee to pay liquidated damages after the franchise agreement is terminated?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) If Franchisor terminates this agreement before the Expiration Date due to a default by Franchisee (including its abandonment of the Franchised Business), or if Franchisee terminates this agreement before the Expiration Date (which will also constitute a default under this agreement), Franchisee shall pay Franchisor, within fifteen days after the effective date of the termination and in addition to the other amounts specified in Article 5 and section 14.1(j), liquidated damages equal to the average monthly Royalty and Branding Fee payable by Franchisee during the twelve months immediately preceding the effective date of the termination, multiplied by the number of months between the effective date of the termination and the Expiration Date.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, if the franchise agreement is terminated early due to a franchisee's default, the franchisee must pay liquidated damages to Caring Transitions within fifteen days after the termination's effective date. This requirement applies both if Caring Transitions terminates the agreement because of the franchisee's default or if the franchisee terminates the agreement prematurely, which also constitutes a default.
The liquidated damages are calculated based on the average monthly Royalty and Branding Fee paid by the franchisee during the twelve months leading up to the termination date. This average is then multiplied by the number of months remaining between the termination date and the original expiration date of the franchise agreement.
Caring Transitions specifies that these liquidated damages are in addition to any other amounts the franchisee owes under the agreement, such as outstanding royalties or fees, and do not relieve the franchisee of their post-termination obligations. The FDD states that this provision is designed to compensate Caring Transitions for losses such as lost royalties and branding fees, goodwill, market representation, consumer confusion, and the expenses associated with recruiting and training a new franchisee.