What costs and expenses can Healthsource Chiropractic recover in connection with the termination of the agreement?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, if the agreement is terminated due to the franchisee's default, Healthsource Chiropractic can recover several costs and expenses. These include all costs and expenses, including attorneys' fees, incurred in connection with the termination, collection of the termination fee, and/or damages, as well as audit fees and expenses. Additionally, Healthsource Chiropractic can recover a termination fee, which is equal to one-half (1/2) of the then-current initial franchise fee for new HealthSource Chiropractic Start-up Clinic franchises, in states where such termination fees are enforceable.
Furthermore, Healthsource Chiropractic is entitled to an amount equal to the franchisee's average monthly Continuing Franchise Fee, Ad Fund contribution, and Technology Fee, multiplied by the number of months remaining in the term of the agreement. This amount is discounted by a present value discount factor of five percent (5%). Healthsource Chiropractic can also claim any additional actual, economic, consequential, and indirect damages incurred, including the loss of future revenues, which are agreed to include the expected amount of Continuing Franchise Fees, Ad Fund contributions, and Technology Fees payable for the remainder of the agreement term.
In practical terms, this means that a franchisee who defaults on their agreement could face significant financial liabilities beyond just unpaid fees. They may be responsible for Healthsource Chiropractic's legal costs, lost future revenue, and other damages. This highlights the importance of understanding and adhering to the terms of the franchise agreement to avoid potential default and associated financial repercussions.