What are the conditions that a Chem Dry franchisee and its owners must satisfy to qualify for a renewal franchise?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
To qualify for a renewal franchise, FRANCHISEE and its Owners must satisfy these conditions:
- a. FRANCHISEE (and each of its Owners) have not defaulted under this Agreement and failed to cure the default within the time permitted under this Agreement during its Term;
- b. Franchisee (and each of its required Owners) have successfully completed all of CDI's then current training courses;
- c. FRANCHISEE (and each of its Owners) are, on the date FRANCHISEE gives its notice of election, in compliance with this Agreement, including without limitation any requirements regarding servicing national accounts; and
- d. FRANCHISEE agrees (regardless of cost) in the notice of election to add or replace specific Operating Assets, including without limitation any proprietary equipment associated with the Franchise, the business vehicles and other equipment), and otherwise modify the BUSINESS as CDI requires to comply with the System Standards then applicable for new entry CHEM-DRY Businesses.
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- If FRANCHISEE and each of its Owners are not, both on the date FRANCHISEE gives CDI written notice of FRANCHISEE'S election to acquire a renewal franchise and on the date on which the Term of the franchise expires, in compliance with this Agreement, FRANCHISEE acknowledges that CDI has no obligation to grant FRANCHISEE a renewal
franchise, whether or not CDI had, or chose to exercise, the right to terminate this Agreement during its term under Section 15.
- Notwithstanding anything to the contrary in this Agreement, at any time during the term of this Agreement, FRANCHISEE fails to be in compliance with this Agreement or any other agreement between FRANCHISEE and CDI, CDI may refuse to grant a renewal franchise by delivering a notice of CDI's refusal to grant a renewal franchise, stating the reasons for such refusal. If CDI'S notice indicates that CDI will permit FRANCHISEE to obtain a renewal franchise, CDI may condition such right upon FRANCHISEE'S continued compliance with this Agreement, including being current in financial obligations to CDI, and any other agreement between CDI and its affiliates and FRANCHISEE.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, a franchisee and their owners must meet specific conditions to qualify for a renewal franchise. These conditions include not being in default under the current franchise agreement and ensuring that any defaults have been resolved within the agreement's specified time frame. Additionally, the franchisee and all required owners must have successfully completed all of Chem Dry's then-current training courses.
To qualify for a renewal, the franchisee and their owners must be in full compliance with the existing agreement on the date they provide notice of their intent to renew. This compliance extends to all aspects of the agreement, including any requirements related to servicing national accounts. Furthermore, the franchisee must agree to update or replace specific operating assets, such as proprietary equipment and business vehicles, to meet the system standards that Chem Dry has in place for new franchises at the time of renewal, regardless of the cost to the franchisee.
Chem Dry emphasizes that if the franchisee and their owners are not in compliance with the agreement both when they give notice of their election to renew and on the date the current franchise term expires, Chem Dry is under no obligation to grant a renewal. This holds true whether or not Chem Dry previously chose to exercise its right to terminate the agreement during its original term. Moreover, Chem Dry retains the right to refuse a renewal franchise at any point during the agreement's term if the franchisee fails to maintain compliance, providing a notice stating the reasons for refusal. However, Chem Dry may, at its discretion, allow a renewal contingent upon the franchisee's continued compliance and satisfaction of all financial obligations.