If Chem Dry terminates the Franchise Agreement, what is the company's obligation regarding the post-termination covenant in Section 16.D?

According to Chem Dry's 2024 Franchise Disclosure Document, Chem Dry has the right to choose whether or not to enforce the post-termination covenant outlined in Section 16.D of the Franchise Agreement. Specifically, Chem Dry can notify the franchisee at the time of termination that it will not enforce this covenant.

If Chem Dry chooses not to enforce the post-termination covenant, it also has no obligation to purchase any inventory from the franchisee as it would otherwise be required to do under Section 20022 of the California Franchise Relations Act (CFRA). This provides Chem Dry with flexibility in how it handles franchise terminations and their aftermath.

For a prospective franchisee, this means that upon termination of the Franchise Agreement by Chem Dry, the franchisee may or may not be bound by the post-termination covenant, depending on Chem Dry's decision at the time of termination. Additionally, if the franchise is in California, Chem Dry's decision to not enforce the post-termination covenant also relieves them of the obligation to buy back inventory. A prospective franchisee should seek clarification regarding the typical circumstances under which Chem Dry would or would not enforce the post-termination covenant.