What does the payment of Competitive Liquidated Damages represent 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, Competitive Liquidated Damages are a payment a franchisee must make if they violate the competitive restrictions outlined in their franchise agreement. Specifically, if a Hydrodog franchisee violates any competitive restrictions, they must pay Hydrodog partial liquidated damages equal to the then-current initial franchise fee within 15 calendar days of the violation.
Hydrodog considers these Competitive Liquidated Damages a reasonable estimate of the costs and expenses it would incur for investigation and internal non-legal costs to prepare to enforce its rights. The payment is not considered a penalty but rather fair compensation to Hydrodog for some, but not all, of the damages, costs, and expenses it will incur if a franchisee violates the competitive restriction.
It's important to note that paying Competitive Liquidated Damages does not prevent Hydrodog from seeking other actual or consequential damages, injunctive relief to stop future violations, or asserting that they have no adequate remedy at law. Hydrodog is also entitled to recover all costs, including attorneys' fees, incurred in connection with collecting Liquidated Damages and enforcing its rights. This means that in addition to the initial franchise fee, a franchisee could be responsible for additional fees and damages.