What is the effect of the Maximum Number on Chem-Dry's ability to grant franchises?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
The number of franchises which can operate as Chem-Dry Businesses in a Franchised Area is determined by dividing the current population of the area by 60,000. The nearest whole number to the quotient (referred to as "Maximum Number") is the number of franchises that CDI may grant in the area for operating and conducting a Chem-Dry business. The sum of franchises granted in the Franchised Area cannot exceed the Maximum Number. We, another franchisee or a third party designated by CDI may service national accounts in your Franchised Area if you elect not to service a national account or if a national account elects not to do business with you. The Franchised Area will be determined by CDI based on population, population density, geographical terrain and market potential. CDI reserves the right to refuse to sell all of the franchises available for an Assigned Area to single franchisee or an affiliated group. Typically, the minimum size of a Franchised Area is a geographic area having a population of at least 60,000 but in some rural, less-populated areas the Franchised Area might have a population as small as about 5,000. Based on population changes, the Maximum Number may increase or decrease and may not remain constant; however, the Maximum Number only affects CDI's ability to grant franchises and no franchise will be terminated solely as a result of a decrease in the Maximum Number.
Source: Item 12 — TERRITORY (FDD pages 45–47)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, the "Maximum Number" directly impacts Chem-Dry's ability to grant franchises within a specific area. This number is calculated by dividing the current population of a franchised area by 60,000. The resulting whole number determines the maximum number of Chem-Dry franchises that can operate in that area. Chem-Dry cannot grant more franchises than this Maximum Number allows.
For a prospective Chem-Dry franchisee, this means the availability of franchise opportunities in a desired location is directly tied to the area's population. If the Maximum Number for an area is already met, Chem-Dry cannot grant additional franchises there unless the population increases. This also means that the number of potential competitors within a territory is somewhat controlled by this formula, although franchisees may still face competition from other franchisees, company-owned outlets, or other channels of distribution.
It's important to note that while the Maximum Number can fluctuate with population changes, a decrease in this number will not result in the termination of any existing Chem-Dry franchises. The Maximum Number only affects Chem-Dry's ability to grant new franchises. Chem-Dry also retains the right to refuse to sell all available franchises in an area to a single franchisee or affiliated group, allowing them to distribute franchise opportunities more broadly.