What rights is the Individual prohibited from exercising until the Franchisee's obligations are fulfilled under the Bevaris Alliance agreement?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
22.5 The Individual shall not, until all of the Franchisee's obligations under this agreement have been finally performed and paid in full, exercise any right:
(a) of subrogation and indemnity; or
(b) to take the benefit of, share in or enforce any security or other guarantee or indemnity for any of the Franchisee's obligations; or
(c) to prove in the liquidation of the Franchisee, other than in accordance with the Franchisor's instructions.
22.6 If the Individual exercises any of the rights referred to in clause 22.5, he or she shall:
- (a) hold any amounts recovered on trust for the Franchisor; and
- (b) pay them to the Franchisor on demand.
- 22.7 During the Term, the Individual shall:
- (a) assure that the Franchisee performs all its obligations under this agreement;
- (b) devote his full-time attention and effort to the Franchisee's Business;
- (c) be a director, officer, or managing member of the Franchisee; and
- (d) hold, in his or her own name, more than 50% of the issued voting capital of the Franchisee.
- 22.8 The Individual may not assign or transfer any of his rights or obligations under this agreement.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, the Individual is restricted from exercising certain rights until the Franchisee has fully met all obligations under the franchise agreement. Specifically, the Individual cannot exercise rights of subrogation and indemnity, which generally involve stepping into the shoes of the Franchisee or seeking compensation for losses.
Additionally, the Individual is prohibited from taking the benefit of, sharing in, or enforcing any security, guarantee, or indemnity related to the Franchisee's obligations. This means the Individual cannot leverage any collateral or assurances meant to protect the Franchisor's interests. The Individual is also restricted from participating in the liquidation of the Franchisee, except under the Franchisor's explicit instructions. This ensures that the Franchisor maintains control over the financial recovery process in case of the Franchisee's insolvency.
If the Individual does exercise any of these prohibited rights, they must hold any recovered amounts in trust for the Franchisor and promptly pay those amounts to the Franchisor upon demand. This provision reinforces the Franchisor's priority in recovering any outstanding debts or unfulfilled obligations. During the term of the agreement, the Individual must ensure the Franchisee performs all obligations, devote full-time attention to the Franchisee's business, be a director, officer, or managing member of the Franchisee, and hold more than 50% of the Franchisee's voting capital. The Individual is also barred from assigning or transferring any rights or obligations under the agreement.