Does the Healthsource Chiropractic agreement allow the developer to claim incidental damages?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Agreement is terminated because of your default, the rights of HealthSource Chiropractic described above or elsewhere in this Agreement may not necessarily be HealthSource Chiropractic's exclusive remedies but will instead supplement any other equitable or legal remedies available to HealthSource Chiropractic, including the right to withhold performance as provided in Section 15.4 of this Agreement. If this Agreement is terminated because of your default, nothing in this Section 16.5 may be construed to deprive HealthSource Chiropractic of the right to recover damages as compensation for lost profits.
17.8 Specific Performance; Injunctive Relief; Liquidated Damages.
a. Equitable Remedies. Provided we give you the appropriate notice, we will be entitled, without being required to post a bond, to the entry of temporary and permanent injunctions and orders of specific performance to (1) enforce the provisions of this Agreement relating to your use of the Marks and non-disclosure, non-solicitation, non-disparagement, and non-competition obligations under this Agreement and any Restrictive Covenants Agreement signed by a General Manager; (2) prohibit any act or omission by you or your employees that constitutes a violation of any applicable law, ordinance, or regulation; constitutes a danger to the public; or may impair the goodwill associated with the Marks or HealthSource Chiropractic franchises; or (3) prevent any other irreparable harm to our interests. If we obtain an injunction or order of specific performance, then you shall pay us an amount equal to the total of our costs of obtaining it, including without limitation reasonable attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses, and any damages we incur as a result of the breach of any such provision. You further agree to waive any
claims for damage in the event there is a later determination that an injunction or specific performance order was issued improperly.
b. Liquidated Damages. You agree that precise damages are difficult to calculate for a breach or violation of the provisions of Section 9 of this Agreement. Therefore, if you breach or violate Section 9 of this Agreement it is agreed that we would suffer actual damages of at least Fifty Thousand Dollars. In addition to any liquidated damages permitted herein, you must pay to us any and all actual damages in excess of the liquidated amount, plus all attorneys' fees incurred by us as a direct or indirect result of any breach or violation of this Agreement.
i. You agree not to recruit or hire, either directly or indirectly, any employee (or a former employee, for six (6) months after his or her employment has ended) of any HealthSource Chiropractic Clinic or Regional Developer franchise operated by us, our affiliates, or another HealthSource Chiropractic franchise owner without first obtaining the written consent of us, our affiliate, or the franchise owner that currently employs (or previously employed) such employee. (If you violate this provision, in addition to any other right or remedy we may have, you agree to pay the employee's current or former employer twice the employee's annual salary, plus all costs and attorneys' fees incurred as a result of the violation. This amount is set at twice the employee's annual salary because it is a reasonable estimation of the damages that would occur from such a breach, and it will almost certainly be impossible to calculate precisely the actual damages from such a breach).
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, Healthsource Chiropractic has the right to recover damages as compensation for lost profits if the franchise agreement is terminated due to the franchisee's default. Additionally, if a franchisee violates Section 9 of the agreement, Healthsource Chiropractic is entitled to actual damages of at least $50,000, along with any excess actual damages and attorney's fees incurred as a result of the breach.
If Healthsource Chiropractic obtains an injunction or order of specific performance against a franchisee, the franchisee is responsible for covering all costs associated with obtaining it. These costs include reasonable attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses, travel and living expenses, and any damages incurred as a result of the breach. The franchisee also agrees to waive any claims for damage if the injunction or specific performance order is later determined to have been issued improperly.
Furthermore, if a Healthsource Chiropractic franchisee recruits or hires an employee from another Healthsource Chiropractic franchise or from Healthsource Chiropractic itself without written consent, the franchisee agrees to pay the employee's current or former employer twice the employee's annual salary. This amount also includes all costs and attorneys' fees incurred as a result of the violation. The agreement specifies that this amount is a reasonable estimation of damages due to the difficulty in precisely calculating the actual damages from such a breach.