What happens if Chem Dry agrees to finance the Initial License Fee for a franchisee?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
use the Marks during the term of this Agreement (the "Initial License Fee"); and
- b. An initial advertising, cleaning solution, and equipment package fee in the amount as set forth on the Summary Page of this Agreement, not including state or local taxes, which can vary, (the "Initial Package").
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- If CDI agrees to finance the Initial License Fee, FRANCHISEE shall pay a down payment in the amount as set forth on the Summary Page when FRANCHISEE signs this Agreement and FRANCHISEE will sign and deliver to CDI FRANCHISEE'S Business Note (the "Business Note") for the balance of the Initial License Fee. The Business Note is payable whether or not this Agreement terminates and is not subject to any claim, set off or defenses arising under this Agreement. CDI may assign, pledge or transfer the Business Note to a third party without notice to FRANCHISEE.
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- Upon execution of this Agreement by CDI, the Initial License Fee shall be deemed fully earned and non-refundable.
B. MONTHLY FRANCHISE FEE
- FRANCHISEE agrees to pay CDI a continuing, non-refundable monthly franchise fee (the "Monthly Franchise Fee") in the amount as set forth on the Summary Page to this Agreement, beginning on the tenth (10th) day of either (A) the fourth (4th) month after FRANCHISEE completes initial training, (B) if FRANCHISEE is an existing Chem-Dry franchisee, the fourth (4th) month after the Effective Date of this Agreement, or (C) if this is a transfer or succession of an existing Chem-Dry business, the tenth (10th) day of the month after the Effective Date of this agreement (the "Payment Start Date") for a license to operate the BUSINESS.
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- CDI may increase, in its sole discretion, the Monthly Franchise Fee not more than once each calendar year to reflect increases in the Consumer Price Index for All Urban Consumers-All Items, All Cities Average (1982-1984 = 100) as published by the U.S. Department of Labor or in a successor index we select ("the Consumer Price Index"). Monthly Franchise Fees are nonrefundable once paid. CDI will notify FRANCHISEE of any change in the Monthly Franchise Fee.
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- If FRANCHISEE continues to operate the BUSINESS after expiration of the Term or termination of this Agreement, FRANCHISEE will continue to pay the Monthly Franchise Fee on the 10th of the month in an amount that is twice the amount of the Monthly Franchise Fee then in effect until FRANCHISEE signs a successor Franchise Agreement and pays the Successor Fee or ceases to operate the BUSINESS.
C. ADDITIONAL FEES AND INTEREST ON LATE PAYMENTS
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- You must pay to us the then-current administrative fee in effect (the "Administrative Fee") specified in the Manual upon your request or when we are required due to your actions or request, amend the Agreement or when you ask us to issue written consent to various transactions or to services for which a specific fee is not imposed elsewhere in this Agreement or the System. As of the Effective Date, the Administrative Fee is $500.00 per transaction.
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- `Each discrete amount payable by FRANCHISEE to CDI or its affiliates under this Agreement shall bear interest after its due date at the lesser of one and one-half percent (1.5%) per month or the highest applicable legal rate for open account business credit in the state of FRANCHISEE's domicile.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, if Chem Dry agrees to finance the Initial License Fee, the franchisee must make a down payment as specified on the Summary Page when signing the Franchise Agreement. The franchisee will then sign and deliver a Business Note to Chem Dry for the remaining balance of the Initial License Fee. This Business Note is payable regardless of whether the Franchise Agreement terminates and is not subject to any claims or defenses arising from the agreement. Chem Dry has the right to assign, pledge, or transfer the Business Note to a third party without notifying the franchisee.
The Business Note represents the balance of the Initial Fee, Initial License Fee, or other amounts owed by the franchisee to Chem Dry. The franchisee's obligations under the Business Note are absolute, irrevocable, and unconditional, and any claims arising from the Franchise Agreement do not affect the obligation to pay the note. Chem Dry can assign, transfer, discount, or pledge the Business Note without notice to the franchisee, and the franchisee's obligations under the note are independent of the Franchise Agreement.
The Business Note may be prepaid in whole or in part, without premium, on any installment due date, with minimum partial payments of $100 or multiples thereof. If the franchisee pays the Initial License Fee amount in full within six months of the Business Note date, Chem Dry will discount the total due for the Initial License Fee by 10%. Late payments are subject to a one-time fee of $100 and accrue interest at the highest applicable legal rate, not exceeding 1.5% per month. After maturity, interest accrues at 18% per annum, and a $40 fee is assessed for each returned payment. Upon default, Chem Dry may declare all obligations under the Business Note immediately due and payable. Additionally, upon termination or expiration of the Franchise Agreement, the franchisee must pay Chem Dry all amounts owed, including the unpaid balance of the Business Note.