Where can I find the specific provisions regarding renewal, termination, transfer, and dispute resolution for a Chem Dry franchise?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 17: RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION]
ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION
This table lists certain important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this disclosure document.
THE FRANCHISE RELATIONSHIP
| Provision | Section in Franchise Agreement and other agreements | Summary |
|---|---|---|
| a. Term of the franchise | Section 1C the | The term is 5 years. CDI may offer a ten- |
| Franchise Agreement, | year franchise agreement when business | |
| Section 9 of | purposes warrant. Certain restrictions | |
| Equipment Agreement | apply. | |
| b. Renewal or extension of | Section 14 | You may acquire a five-year successor |
| the term | term, if you meet certain qualifications. |
| Provision | Section in | Summary |
|---|---|---|
| Franchise | ||
| Agreement and | ||
| other agreements | ||
| confidential information, use of non | ||
| Chem-Dry cleaning solutions two or | ||
| more times, non-compliance with laws, | ||
| repeated defaults, bankruptcy related | ||
| events, termination of another franchise | ||
| agreement | ||
| i. | Section | Pay |
| Your | 16 | outstanding |
| obligations | of | amounts, |
| on | the | de |
| termination/nonrenewal | Franchise Agreement, | identification, and return of confidential |
| Section 9 of the | information, telephone numbers, | |
| Equipment Agreement | customer lists, proprietary equipment | |
| and Section 13 of the | and operating manuals (see also "s.") | |
| Software | ||
| License | ||
| Agreement | ||
| j. Assignment of contract | Section 13A of the | No restriction on CDI's right to assign |
| by us | Franchise | |
| Agreement | ||
| and the Business Note | ||
| k. "Transfer" by you – | Section 13B of the | Includes transfer of equity, the Franchise |
| definition | Franchise Agreement, | Agreement or the Business assets |
| Section | ||
| 5 | ||
| of | ||
| the | ||
| Equipment Agreement | ||
| and Section 18 of the | ||
| Software | ||
| License | ||
| Agreement | ||
| l. CDI's approval of | Section 13B | We have the right to approve all |
| transfer by you | transfers, | |
| our | ||
| consent | ||
| not | ||
| to | ||
| be | ||
| unreasonably withheld | ||
| m. Conditions for CDI's approval of transfer | Section 13C | Transferee qualifies, transferee assumes all obligations, all amounts due are paid |
| in full, transferee has no interest in | ||
| competitive | ||
| business, | ||
| transferee | ||
| satisfactorily | ||
| completes | ||
| training, | ||
| transferee signs then current franchise | ||
| agreement | ||
| and | ||
| related | ||
| documents, | ||
| transfer fee paid, release signed (if law | ||
| allows), you subordinate amounts due to | ||
| you, you correct any deficiencies and | ||
| make any requested updates, you abide | ||
| by covenant not to compete, transferee | ||
| purchases all required equipment, and | ||
| you de-identify | ||
| Provision | Section in Franchise Agreement and other agreements | Summary | |
|---|---|---|---|
| any dispute, notwithstanding any state | |||
| law to the contrary. | |||
| v. | Choice of forum | Section 17I | Litigation in Tennessee (subject to state |
| law) | |||
| w. | Choice of law | Section 17H | Tennessee law applies (subject to state |
| law); Monetary claims for liquidated | |||
| amounts may be asserted in litigation | |||
| instead of arbitration by either you or us. | |||
| The defendant may initiate arbitration of | |||
| any counterclaim or underlying dispute, | |||
| in which case the litigation must be | |||
| dismissed, and the arbitration will be the | |||
| means of dispute resolution. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 51–55)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, Item 17 provides a summary of important provisions in the franchise and related agreements regarding renewal, termination, transfer, and dispute resolution. It indicates the specific sections within the Franchise Agreement and other agreements where these provisions are detailed.
Specifically, the term of the Chem Dry franchise is found in Section 1C of the Franchise Agreement and Section 9 of the Equipment Agreement, and it is generally 5 years, although Chem Dry may offer a 10-year agreement in some cases. Section 14 outlines the conditions under which a franchisee may be able to acquire a five-year successor term.
Regarding termination, Section 16 specifies the franchisee's obligations upon termination or non-renewal, including paying outstanding amounts, de-identifying, and returning confidential information. Transfer provisions, including the definition of "transfer" and the conditions for Chem Dry's approval, are detailed in Sections 13A, 13B, and 13C. Dispute resolution is addressed in Section 17F, which states that, except for certain claims, all disputes must be arbitrated in Nashville, Tennessee, subject to state law. Sections 17H and 17I cover choice of law and choice of forum, respectively, also subject to state law.
Prospective franchisees should carefully review these sections within the actual agreements to fully understand their rights and obligations regarding these critical aspects of the franchise relationship.. Item 17 itself states that you should read these provisions in the agreements attached to the disclosure document.