What is the basis for the variable consideration in Chem Dry's franchise agreements?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
S**, Franchisee desires to establish only one office located in one of its franchised areas and to operate all of the Franchises from that single office location; and
WHEREAS, CDI is willing to grant an exception to the office location requirement in the Agreements, on a limited, non transferrable, and revocable basis.
NOW, THEREFORE, in consideration of the mutual promises made herein, CDI and Franchisee agree to be bound by the following terms and conditions
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- Unless this COA is signed in conjunction with the sale of a new Chem-Dry franchise, Franchisee agrees to pay CDI a nonrefundable administration fee of $500.00 as consideration for the privilege of headquartering all Franchises from a single office location.
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- This COA will expire with the Franchise Agreement, and is non renewable and non-transferrable.
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- Pursuant to section 11 of the Agreements, Franchisee agrees to maintain and preserve full and accurate books for each franchise headquartered at the single office location.
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- Upon expiration of this COA, Franchisee may be eligible to enter into a second COA with CDI so long as Franchisee notifies CDI of its desire to do so at least sixty (60) days prior to the expiration of this COA. Any subsequent COAs will be upon then current terms and conditions and will require payment of the then current fee. Upon expiration of this COA and if CDI does not enter into a new COA with Franchisee, Franchisee will have until the expiration date of this COA to move all franchise operations to office locations within the designated franchised areas for each Franchise. Failure to do so within the timeframe will be a material breach of the Agreement for that Franchise. Franchisee acknowledges and agrees CDI has no obligation to enter into subsequent COAs with Franchisee and that doing so will be at CDI's sole discretion.
tered into by CDI solely as an accommodation to Franchisee and CDI may terminate this COA, with or without cause, upon sixty (60) days written notice to Franchisee. In the event this COA is terminated, Franchisee agrees to all franchise operations to office locations wi
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to the 2024 Chem Dry Franchise Disclosure Document, variable consideration is tied to a Consolidated Office Agreement (COA). This agreement allows a franchisee who owns multiple Chem Dry franchises in different areas to operate all of them from a single office location, which is an exception to the standard requirement of having an office in each franchised area.
If a franchisee signs a COA and it is not in conjunction with the sale of a new Chem-Dry franchise, the franchisee must pay Chem Dry a nonrefundable administration fee of $500. This fee serves as consideration for the privilege of operating multiple franchises from a single office. The COA expires with the Franchise Agreement and is non-renewable and non-transferable.
Chem Dry may terminate the COA with or without cause, providing 60 days written notice to the franchisee. If the COA is terminated, the franchisee must move all franchise operations to individual office locations within the designated franchised areas within the timeframe specified in Chem Dry's notice. If the Franchise Agreement for the location of the single office terminates or expires, the franchisee must immediately move the office to another location approved by Chem Dry.