What is the penalty for violating the employee recruitment/hiring restrictions at Healthsource Chiropractic?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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 FDD, if a franchisee violates the restrictions on recruiting or hiring employees from other Healthsource Chiropractic locations, they face a significant financial penalty. Specifically, the franchisee must pay the employee's current or former employer twice the employee's annual salary.
This penalty is designed to compensate for the damages resulting from the breach of the agreement. Healthsource Chiropractic states that calculating the precise actual damages from such a breach would be nearly impossible, so the amount is set at twice the employee's annual salary as a reasonable estimation of damages.
In addition to the financial penalty, Healthsource Chiropractic retains the right to pursue any other legal remedies available to them. This could include seeking an injunction to prevent further violations or pursuing additional damages beyond the specified amount. The franchisee is also responsible for covering all costs and attorneys' fees incurred as a result of the violation, which could substantially increase the overall financial burden.
Prospective franchisees should carefully consider these restrictions and penalties before entering into a franchise agreement with Healthsource Chiropractic. Understanding and adhering to these terms is crucial to avoid potentially significant financial repercussions.