What agreements must I enter into to become a Chem-Dry franchisee?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
To become a franchisee of a Chem-Dry Business, you must enter into the Franchise Agreement (the "Franchise Agreement") and issue the Business Note (the "Business Note") attached as Exhibit B and Exhibit C. If a franchisee is an entity, all owners with more than a 5% ownership interest must sign the Guaranty and Assumption of Obligation attached to the Franchise Agreement and co-sign the Business Note. Under the Franchise Agreement, you must offer and perform carpet and area rug cleaning, upholstery cleaning, spot removal and protecting services, including removing red stains, treating pet urine odor on carpets and imparting stain resistance to carpet fibers that we mandate (the "Required Services"). You also may offer and perform additional services ("Additional Services") that we first
approve for as long as you meet the requirements for continuing to offer the Additional Services. We refer to the Required Services and the Additional Services as the "Approved Services." We may require that you first successfully complete additional training and/or purchase of additional equipment and cleaning solutions. The current list of Additional Services includes leather and vinyl cleaning, carpet repair, carpet spot dyeing, vinyl composite tile cleaning services, wood floor and luxury vinyl plank cleaning services, and dryer vent cleaning. We reserve the right to change the lists of Required Services and Additional Services at any time in our discretion. Your Franchise Agreement identifies a nonexclusive "Franchised Area" that we assign in which you must deliver the Approved Services. The population of a Franchised Area determines the number of Chem-Dry Businesses that the Franchised Area can sustain according to the formula of one Chem-Dry franchise per 60,000 residents. Multiple Chem-Dry Businesses may serve the same Franchised Area.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 9–14)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, to become a franchisee, you must enter into two agreements: the Franchise Agreement and the Business Note. The Franchise Agreement outlines the terms and conditions of the franchise, including the services you must offer, known as the "Required Services," and any additional services that Chem-Dry approves. The Business Note is attached as Exhibit C to the Franchise Agreement.
If the franchisee is a business entity, any owner with more than a 5% ownership stake must also sign a Guaranty and Assumption of Obligation, which is attached to the Franchise Agreement, and co-sign the Business Note. This ensures that individuals with significant control over the franchise are personally responsible for upholding the obligations outlined in the agreements.
The Franchise Agreement also specifies a nonexclusive "Franchised Area" where you are authorized to provide the approved services. The size and population of this area are factors in determining how many Chem-Dry franchises can operate within it, with a general guideline of one franchise per 60,000 residents. It's important to note that multiple Chem-Dry businesses may serve the same franchised area, which means franchisees may face competition from other Chem-Dry franchisees.