Are the liquidated damages for early termination of the Spray Net agreement in addition to other remedies Spray Net may have?

According to Spray Net's 2025 Franchise Disclosure Document, the liquidated damages the franchisee must pay upon early termination of the agreement are in addition to other remedies Spray Net may pursue. Specifically, Spray Net retains the right to pursue remedies for breaches of restrictive covenants outlined in Section 14 of the agreement, as well as extracontractual claims like fraud or unfair and deceptive trade practices.

This means that if a franchisee terminates the agreement early, they will be required to pay liquidated damages, which are calculated as seven percent of the applicable annual Minimum Gross Sales for the Franchised Business corresponding to the year of operation in which the agreement is terminated. The applicable annual Minimum Gross Sales will be based on the number of Territories the franchisee has purchased and the length of time that the franchisee has operated the Franchised Business.

In addition to these liquidated damages, Spray Net can also pursue legal action against the franchisee for violating the restrictive covenants in Section 14 of the agreement. These covenants likely include restrictions on operating a competing business or soliciting Spray Net's customers or employees. Spray Net can also pursue claims of fraud or unfair trade practices if they believe the franchisee engaged in such conduct. This could expose the franchisee to additional financial liability beyond the liquidated damages.

Prospective franchisees should carefully review Section 14 of the franchise agreement to understand the scope of the restrictive covenants and the potential consequences of violating them. They should also be aware that Spray Net can pursue multiple legal avenues in the event of an early termination, potentially increasing the financial burden on the franchisee.