Can a Chem-Dry franchisee lease or rent the equipment to another party?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
TRANSFER OF OWNERSHIP. Franchisee acknowledges that the Franchise Agreement imposes restrictions and limitations on the resale of the Equipment. Franchisee acknowledges that the Equipment may not be sold, leased, or rented to or used by any other party, except under the conditions stated on the attached repurchase schedule, as provided in the Franchise Agreement, or as permitted in writing by CDI. The Equipment is proprietary and authorized for use only within the Chem-Dry® franchise network. Franchisee covenants that Franchisee will not transfer title to the Equipment except in one of these three ways:
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, a franchisee is generally prohibited from leasing or renting their equipment to another party. The equipment is considered proprietary to the Chem-Dry franchise system and is authorized for use only within the Chem-Dry franchise network.
There are limited exceptions to this restriction. A Chem-Dry franchisee can sell the equipment to another Chem-Dry franchisee in good standing, provided that Chem-Dry has the first right of refusal to purchase the equipment and approves the transaction. If Chem-Dry financed any portion of the equipment, the proceeds must first be used to pay off any outstanding balance to Chem-Dry before the equipment is transferred.
In the event that a Chem-Dry franchisee is terminating or not renewing their Franchise Agreement and owns another Chem-Dry franchise, the equipment can be transferred to that other franchise upon written request. Otherwise, the franchisee cannot lease or rent the equipment to any other party without written permission from Chem-Dry.