What is the franchisee's obligation regarding the Chem Dry equipment until the lender takes possession?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Until CDI is notified by Lender that it has taken possession or constructive possession of the Equipment, CDI may deal with Franchisee as the lawful possessor and operator of the Equipment, and Franchisee shall at all times remain obligated to comply with its obligations to maintain, insure, protect and service the Equipment under the Sales Agreement and to use the Equipment only in compliance with the Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, until the lender notifies Chem Dry that it has taken possession of the equipment, the franchisee is obligated to maintain, insure, protect, and service the equipment as per the Sales Agreement. Additionally, the franchisee must use the equipment only in compliance with the Franchise Agreement.
This means that even if a franchisee is facing financial difficulties and a lender has a security interest in the Chem Dry equipment, the franchisee remains responsible for the equipment's upkeep and proper use. This obligation continues until the lender formally takes possession, which requires notification to Chem Dry.
For a prospective Chem Dry franchisee, this highlights the importance of understanding the terms of both the Franchise Agreement and any financing agreements related to equipment. Franchisees need to be aware that their responsibilities for the equipment continue even when facing potential default, emphasizing the need for careful financial planning and risk management.
Chem Dry retains the right to deal directly with the franchisee regarding the equipment until formal notification of lender repossession, reinforcing Chem Dry's control over its proprietary equipment and brand standards.