Does the liquidated damages payment for breaching the Caring Transitions non-compete agreement preclude other remedies for the Franchisor?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
t to ascertain, but the parties nevertheless desire certainty in this matter. Accordingly, if Franchisee breaches or fail to comply with any of the provisions of subparagraph 15.3(a), Franchisee 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 Franchisee, or any spouse, child, parent, or sibling of Franchisee or of any principal of Franchisee, 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.
- (d) The time period referred to in subparagraph 15.3(a) will be stayed during any violation or breach of the terms thereof. The covenants in this Section 15.3 will survive the expiration, termination, or transfer of this Agreement.
- 15.4 Nonsolicitation of Customers and Shared Referral Sources. Franchisee shall not, directly or indirectly, for itself or through, on behalf of, or in conjunction with any person or entity for a continuous and uninterrupted period commencing upon the expiration or termination of this agreement (regardless of the cause for termination) and continuing for two years thereafter, directly or indirectly: (i) solicit or sell products or services to any person who was a customer of the franchised business at any time during the term of this agreement;
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, the liquidated damages payment for breaching the non-compete agreement does not preclude other remedies available to Caring Transitions. Specifically, if a franchisee breaches the non-compete provisions, they must pay Caring Transitions 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 the franchisee, or any spouse, child, parent, or sibling of Franchisee or of any principal of Franchisee, or to which any of those parties becomes entitled, as the result of the breach or noncompliance.
However, this payment is explicitly stated as "not exclusive of any other remedies" that Caring Transitions may pursue. These other remedies include equitable remedies, attorneys' fees, and costs. This means that in addition to receiving the 15% royalty as liquidated damages, Caring Transitions retains the right to seek court orders to enforce the non-compete agreement (equitable remedies) and to recover any legal expenses incurred in pursuing the breach.
This provision is significant for prospective franchisees because it highlights the comprehensive protection Caring Transitions seeks for its business interests. The liquidated damages clause provides a defined monetary compensation for a breach, but it does not limit Caring Transitions' ability to pursue additional legal avenues to fully address the harm caused by a franchisee's violation of the non-compete agreement. Franchisees should understand that breaching the non-compete has financial and legal ramifications beyond just the liquidated damages payment.
In the event of early termination due to franchisee default, the franchisee's payment of liquidated damages is considered full compensation to Caring Transitions only for the Brand Damages resulting from the early termination. This payment is in addition to, and not in lieu of, the franchisee's obligations to pay other amounts due to Caring Transitions as of the termination date and to comply strictly with the Post-Termination Provisions. This liquidated damages provision does not cover any other damages to which Caring Transitions might be entitled as a result of the franchisee's actions or inaction.