What is the effect of the Sales Agreement on the Franchise Agreement for Chem Dry?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
EXHIBIT B TO FRANCHISE AGREEMENT
EQUIPMENT SALES AND SECURITY AGREEMENT
This Agreement is made and entered into as of The Effective Date by and between Franchisee and CDI, and relates to the Franchise Agreement between Franchisee and CDI for Franchisee's operation of a Chem-Dry® Carpet Cleaning business franchise (the "Business"). In consideration of the mutual promises and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which the parties mutually acknowledge, the parties mutually agree and intend to be legally bound as follows:
EQUIPMENT PURCHASE. Franchisee agrees to purchase from CDI and CDI agrees to sell to Franchisee the tangible equipment listed on the Summary Page on the payment terms set forth in the Schedule. The equipment purchased under this Agreement shall be referred to as the "Equipment." To secure Franchisee's obligations to pay CDI for the Equipment, in the event CDI financed any portion of the purchase of the Equipment, and to dispose of the Equipment in accordance with the Franchise Agreement, Franchisee has granted to CDI the security interest in the Equipment set forth herein.
SHIPMENT, TITLE & RISK OF LOSS. CDI will arrange for shipment of the Equipment on the Schedule to Franchisee. Risk of loss and title to the Equipment transfers to Franchisee upon delivery, subject to any security interest of CDI retained under this Agreement. Franchisee shall inspect each shipment promptly upon receipt and will be deemed to accept the Equipment as conforming to the Schedule unless any defects or deficiencies are noted to CDI within 2 business days after delivery. Franchisee agrees, if no defects or deficiencies are reported within this time period, all sales are final.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the Equipment Sales and Security Agreement is related to the Franchise Agreement. The Equipment Sales and Security Agreement outlines the terms under which a franchisee purchases equipment from Chem Dry. This agreement is secured by the equipment itself, ensuring that Chem Dry retains a security interest in the equipment until the franchisee fulfills their payment obligations.
Specifically, the Equipment Sales and Security Agreement is initiated when a franchisee agrees to purchase tangible equipment from Chem Dry, as listed on the Summary Page. Chem Dry agrees to sell this equipment to the franchisee under the payment terms outlined in the Schedule. This agreement is directly linked to the Franchise Agreement because the franchisee's ability to use the equipment is essential for operating a Chem Dry franchise.
The Equipment Sales and Security Agreement also addresses the logistics of equipment shipment, title transfer, and risk of loss. Upon delivery of the equipment, the risk of loss and title transfer to the franchisee, although Chem Dry retains a security interest. The franchisee is responsible for inspecting the equipment upon arrival and reporting any defects or deficiencies to Chem Dry within two business days. Failure to report issues within this timeframe implies acceptance of the equipment in its delivered condition, and all sales are considered final.