How are the Competitive Liquidated Damages calculated for a Hydrodog franchisee?
Hydrodog Franchise · 2025 FDDAnswer from 2025 FDD Document
Therefore, in the event that you violate any of the Competitive Restriction set forth in this Agreement, within 15 calendar days of such violation, you will pay us partial liquidated damages in the amount of our then-current initial franchise fee ("Competitive Liquidated Damages").
You agree that Competitive Liquidated Damages as calculated under this Section represent the best estimate the Franchisor would suffer for its costs and expenses of investigation and its internal non-legal costs to prepare to enforce its rights if you were to violate the Competitive Restriction set forth in this Agreement.
Your payment of the Competitive Liquidated Damages will not be considered a penalty, but instead a reasonable estimate of fair compensation to the Franchisor for some of, but not all of, the damages, costs and expenses it will incur if you violate the Competitive Restriction.
The Franchisor is also be entitled to recover all costs, including attorneys' fees incurred in connection with collection of Liquidated Damages as well as enforcing its rights.
Without limiting the foregoing, the Competitive Liquidated Damages will not be the Franchisor's exclusive remedy, will not prevent us from seeking other actual or consequential damages, injunctive relief enjoining future violations of the Competitive Restriction, nor will it in any way limit the Franchisor' right to assert that we have no adequate remedy at law in the event of breach.
Source: Item 23 — RECEIPTS (FDD pages 43–166)
What This Means (2025 FDD)
According to Hydrodog's 2025 Franchise Disclosure Document, if a franchisee violates the competitive restrictions outlined in their agreement, they must pay 'Competitive Liquidated Damages.' These damages are equivalent to Hydrodog's then-current initial franchise fee. This payment is due within 15 calendar days of the violation.
Hydrodog states that this Competitive Liquidated Damages amount is an estimation of the costs and expenses the company would incur for investigating the violation and the internal costs of preparing to enforce their rights. The document emphasizes that this payment is not a penalty but a fair estimate of compensation for the damages, costs, and expenses Hydrodog will incur due to the franchisee's violation of the competitive restrictions.
It's important to note that the payment of Competitive Liquidated Damages does not prevent Hydrodog from seeking other actual or consequential damages, injunctive relief, or asserting that they have no adequate remedy at law in the event of a breach. Hydrodog is also entitled to recover all costs, including attorneys' fees, associated with collecting the liquidated damages and enforcing their rights. This means that in addition to the initial franchise fee, a franchisee could be responsible for additional costs if they violate the competitive restrictions.