Does the Healthsource Chiropractic agreement limit the franchisee's recovery to actual damages in the event of a dispute?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
ch such an agreement within 30 days after notice of the issue is given to the other party, or if fundamental changes to this Agreement are required to make it conform to the legal requirements, then we reserve the right to terminate this Agreement upon notice to you, in which case neither party shall have any liability to the other but all of your post-termination obligations set forth in Section 16 shall apply.
- 15.3 Our Remedies upon Termination. In the event that we terminate this Agreement under Section 15.1 or other applicable provisions of this Agreement, but excluding the circumstances described in Section 15.2, all rights granted to you under this Agreement shall immediately and automatically terminate and revert to us, and we shall be entitled, to recover from you any and all of the foregoing:
- a. in those states in which such termination fees are enforceable, to receive from you a termination fee in the amount equal to one-half (1/2) of our then-current initial franchise fee for new HealthSource Chiropractic Start-up Clinic franchises; and
- b. an amount equal to your average monthly Continuing Franchise Fee, Ad Fund contribution, and Technology Fee multiplied by the number of months remaining in the Term of this Agreement, discounted by a present value discount factor of five percent (5%) and any additional actual, economic, consequential and indirect damages incurred by us including, without limitation, the loss of future revenues (which we both agree include the expected amount of Continuing Franchise Fees, Ad Fund contributions, and Technology Fees payable by you for the remainder of the Term of this Agreement); and
- c. all costs and expenses, including attorneys' fees, incurred in connection with the termination, collection of the termination fee and/or damages, and audit fees and expenses.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Healthsource Chiropractic franchise agreement does not appear to limit the franchisee's recovery to actual damages in the event of a dispute. Instead, Section 15.3 outlines Healthsource Chiropractic's remedies upon termination of the agreement due to the franchisee's default.
Specifically, Healthsource Chiropractic is entitled to recover a termination fee (in states where such fees are enforceable) equal to one-half of the then-current initial franchise fee for new start-up clinics. Additionally, they can recover an amount equal to the average monthly Continuing Franchise Fee, Ad Fund contribution, and Technology Fee, multiplied by the number of months remaining in the agreement term, discounted by 5%. Healthsource Chiropractic can also recover actual, economic, consequential, and indirect damages, including the loss of future revenues, as well as all costs and expenses, including attorneys' fees and audit fees.
Section 14.a also states that Healthsource Chiropractic is entitled to temporary and permanent injunctions and orders of specific performance to enforce the provisions of the agreement. This suggests that Healthsource Chiropractic is not limited to only recovering actual damages, and the agreement allows for broader remedies in case of franchisee default or breach of contract.