Does CDI have a right of first refusal to purchase the equipment from a Chem-Dry franchisee?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
Sell the Equipment to another Chem-Dry Franchisee in good standing under its franchise agreement at a mutually acceptable price. CDI has first right of refusal to purchase the Equipment and must approve any transaction. If CDI financed any portion of the purchase price of the Equipment, the transferee will pay the proceeds to CDI if there is any outstanding balance under the Schedule for the Equipment prior to transfer of the Equipment. At the time of transfer Franchisee's account with CDI must be current and the purchasing Franchisee may not have any pending default under any agreement with the proposed transferee.
If Franchisee is terminating or not renewing the Franchise Agreement and Franchisee owns another Chem-Dry franchise, the Equipment (and the liability for any amount owing on the purchase price of the Equipment) will be transferred to that franchise upon written request.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, Chem-Dry, Inc. (CDI) does have the first right of refusal to purchase equipment from a franchisee. This applies when a franchisee intends to sell their equipment to another Chem-Dry franchisee in good standing. The price of the equipment must be mutually acceptable to both parties.
This right of first refusal means that before a Chem-Dry franchisee can sell their equipment to another franchisee, they must first offer CDI the opportunity to purchase it at the agreed-upon price. If CDI declines, then the franchisee is free to proceed with the sale to the other franchisee. Additionally, CDI must approve any transaction between franchisees.
It's important to note that if CDI financed any portion of the equipment's purchase price, the proceeds from the sale must first be used to pay off any outstanding balance owed to CDI before the equipment is transferred. The franchisee's account with CDI must also be current at the time of the transfer, and the purchasing franchisee cannot have any pending defaults under any agreement with the proposed transferring franchisee. If a franchisee is terminating or not renewing their agreement and owns another Chem-Dry franchise, the equipment can be transferred to that franchise upon written request.