Is the 360 Painting franchisee still liable to telephone companies after transferring the telephone numbers and listings to the franchisor?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
After the Telephone Companies have duly transferred all Franchisee's Interest in such Telephone Numbers and Listings to Franchisor, as between Franchisee and Franchisor, Franchisee will have no further Interest in, or obligations under, such Telephone Numbers and Listings.
Notwithstanding the foregoing, Franchisee will remain liable to each and all of the Telephone Companies for the sums Franchisee is obligated to pay such Telephone Companies for obligations Franchisee incurred before the date Franchisor duly accepted the transfer of such Interest, or for any other obligations not subject to the Franchise Agreement or this Telephone Listing Agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, after a franchisee transfers their interest in telephone numbers and listings to 360 Painting, the franchisee will generally have no further interest in or obligations under such telephone numbers and listings, as between the franchisee and 360 Painting. However, the franchisee remains liable to the telephone companies for sums they were obligated to pay before the date 360 Painting accepted the transfer of interest. This also applies to any other obligations not subject to the Franchise Agreement or the Telephone Listing Agreement.
In simpler terms, if a 360 Painting franchisee has outstanding bills or payment obligations to telephone companies before the transfer date, they are still responsible for those debts. The transfer of the phone numbers and listings to 360 Painting does not absolve the franchisee of pre-existing financial responsibilities to the phone companies. This is a standard practice in franchising to ensure that franchisors can take over business operations without inheriting the franchisee's prior debts.
This provision protects the telephone companies and ensures they receive payment for services rendered. It also clarifies the financial responsibilities of the franchisee and 360 Painting during and after the termination or transfer process. Franchisees should ensure all accounts with telephone companies are current before transferring their interest to avoid any potential disputes or liabilities.