If a Spray Net franchisee breaches the non-compete agreement, what remedy is Spray Net entitled to?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
Therefore, upon the termination of this Agreement before the end of the Term, Franchisee shall pay Franchisor liquidated damages equal to seven percent (7%) of the applicable annual Minimum Gross Sales for the Franchised Business found in Section 6.Z. of this Agreement corresponding to the year of operation in which this agreement is terminated.
For avoidance of doubt, the applicable annual Minimum Gross Sales will be based on the number of Territories Franchisee has purchased and the length of time that Franchisee has operated the Franchised Business.
These liquidated damages are in addition to all remedies that Franchisor may have against Franchisee for breach of the restrictive covenants found in Section 14 of this Agreement or extracontractual claims such as fraud or unfair and deceptive trade practices.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, in addition to other remedies, if a franchisee terminates the agreement early, Spray Net is entitled to liquidated damages. These damages are equal to 7% of the applicable annual Minimum Gross Sales for the Franchised Business, as detailed in Section 6.Z of the Franchise Agreement, corresponding to the year in which the agreement is terminated.
The calculation of the applicable annual Minimum Gross Sales will depend on the number of territories the franchisee has purchased and the length of time the franchisee has operated the franchised business. These liquidated damages are in addition to all other remedies that Spray Net may have against the franchisee for breaching the restrictive covenants found in Section 14 of the agreement, or for extracontractual claims such as fraud or unfair and deceptive trade practices.
This means that if a Spray Net franchisee violates the non-compete agreement, Spray Net can pursue legal remedies, including seeking compensation for damages resulting from the breach. The liquidated damages clause provides a pre-determined amount that the franchisee must pay if they terminate the agreement early, but this does not limit Spray Net's ability to pursue other legal actions for violations of the non-compete terms or other misconduct. Prospective franchisees should carefully review Sections 6.Z and 14 of the Franchise Agreement to fully understand the terms and potential financial implications of early termination or breach of the non-compete agreement.