Under what circumstances does Big O Tires have the right to offset amounts owed by or to the franchisee?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
26.01 Right of Offset. Big O shall have the right at any time before or after termination of this Agreement, without notice to Franchisee, to offset any amounts or liabilities that may be owed by the Franchisee to Big O against any amounts or liabilities that may be owed by Big O to Franchisee under this Agreement or any other agreement, loan, transaction or relationship between the parties. Franchisee will not be allowed to set off amounts owed to Big O for royalty fees, National Marketing Program contributions, Noncompliance Service Charges, or other amounts due hereunder, against any monies owed to Franchisee, which right of set off is expressly waived by Franchisee. No endorsement or statement on any check or payment of any sum less than the full sum due to Big O shall be construed as an acknowledgment of payment in full or an accord and satisfaction, and Big O may accept and cash such check or payment without prejudice to its right to recover the balance due or pursue any other remedy provided herein or by law.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, Big O Tires has the right to offset amounts. Big O Tires can offset any amounts or liabilities the franchisee owes them against any amounts or liabilities Big O Tires owes the franchisee. This right can be exercised at any time, both before and after the termination of the Franchise Agreement, and without providing prior notice to the franchisee.
However, the franchisee is not allowed to offset amounts owed to Big O Tires for specific fees and contributions against any monies Big O Tires owes to the franchisee. These include royalty fees, National Marketing Program contributions, Noncompliance Service Charges, and any other amounts due under the Franchise Agreement. The franchisee expressly waives their right to set off these amounts.
Big O Tires' ability to offset debts is a standard practice in franchising, allowing the franchisor to reconcile accounts efficiently. However, the explicit waiver by the franchisee of their right to set off certain payments emphasizes the franchisor's priority in receiving these essential fees, which are crucial for maintaining the Big O Tires system and brand standards.