Within how many days of termination must a Caring Transitions franchisee pay liquidated damages?
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's 2025 Franchise Disclosure Document, a franchisee must pay liquidated damages within fifteen days of the termination date. This applies if Caring Transitions terminates the agreement before its expiration date due to the franchisee's default, or if the franchisee terminates the agreement early, which also constitutes a default.
The liquidated damages are calculated based on the average monthly Royalty and Branding Fee payable by the franchisee during the twelve months preceding 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.
The FDD states that this liquidated damages provision is designed to compensate Caring Transitions for losses including lost royalties and branding fees, loss of goodwill, market representation, consumer confusion, and the expenses associated with recruiting and training a new franchisee. The agreement emphasizes that the liquidated damages are a reasonable estimate of fair compensation and not a penalty, but also notes that these damages only cover losses directly related to the early termination and do not preclude Caring Transitions from seeking additional damages for other breaches by the franchisee.