What is the liquidated damages clause in the Monicals Pizza California addendum intended to address?

According to the 2025 Monicals Pizza Franchise Disclosure Document, the California addendum addresses the enforceability of the liquidated damages clause within the Franchise Agreement. Specifically, it acknowledges that under California Civil Code Section 1671, certain liquidated damages clauses may not be enforceable.

This means that while the standard Monicals Pizza franchise agreement may include a clause outlining predetermined damages the franchisee must pay upon early termination or breach, California law might override this provision. California courts may scrutinize the reasonableness of the liquidated damages amount, and if deemed excessive or punitive, the clause could be deemed unenforceable.

For a prospective Monicals Pizza franchisee in California, this addendum serves as a reminder to carefully review the liquidated damages clause with legal counsel. It highlights the potential for California law to protect franchisees from unduly burdensome damage assessments, offering a degree of protection not necessarily available in other states. Franchisees should understand the specific conditions under which liquidated damages would be assessed and whether those conditions align with California's legal standards for enforceability.