Is Healthsource Chiropractic allowed to require a Healthsource Chiropractic Franchise Owner to consent to liquidated damages in Minnesota?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
greement, in a form approved by us, to maintain confidential our Confidential Information, proprietary information, and trade secrets as described in Paragraph 9.1. You must forward to us a copy of each such signed agreement.
- h. All of your employees and independent contractors must render prompt, efficient and courteous service to all customers of the Franchise.
- 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).
10.8 Insurance
a.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
Based on the 2025 Healthsource Chiropractic Franchise Disclosure Document, it appears that Healthsource Chiropractic can require a franchisee to consent to liquidated damages in Minnesota under specific circumstances. The FDD mentions that if a franchisee violates the agreement by recruiting or hiring an employee from another Healthsource Chiropractic location (or a former employee within six months of their departure) without written consent, the franchisee agrees 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.
Healthsource Chiropractic states that this amount is considered a reasonable estimation of the damages that would occur from such a breach, acknowledging that precisely calculating the actual damages would be nearly impossible. This clause functions as a form of liquidated damages, where a predetermined amount is agreed upon to compensate for potential damages resulting from a specific breach of contract.
Casey Paulsen / HealthSource Midwest America, LLC operates a Regional Developer franchise in Minnesota. Mr. Paulsen also owns and operates a chiropractic clinic (Advanced Chiropractic Health) in Plymouth, Minnesota, which converted to a HealthSource Chiropractic in 2007. A prospective franchisee in Minnesota should carefully review the franchise agreement and consult with a legal professional to fully understand the implications of the liquidated damages clause and its enforceability under Minnesota law.