What is the meaning of 'Equipment' in the Chem-Dry Equipment Sales and Security Agreement?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
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 pa
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 defines "Equipment" as the tangible equipment that the franchisee purchases from CDI (Chem-Dry, Inc.) as listed on the Summary Page, with payment terms outlined in the Schedule. This equipment is essential for operating a Chem-Dry carpet cleaning business. Chem-Dry retains a security interest in the equipment to ensure the franchisee fulfills their payment obligations, especially if CDI finances any portion of the purchase.
The agreement also covers aspects like shipment, title, and risk of loss, which transfer to the franchisee upon delivery, although Chem-Dry retains a security interest. The franchisee is responsible for inspecting the equipment upon arrival and reporting any defects or deficiencies to CDI within two business days. Failure to report issues within this timeframe means the franchisee accepts the equipment as is, and the sale becomes final.
Furthermore, the equipment must be used exclusively with Chem-Dry authorized cleaning solutions and according to specified procedures. Unauthorized use is considered a breach of the Franchise Agreement, potentially leading to Chem-Dry repurchasing the equipment for a nominal fee of $10. The franchisee also acknowledges restrictions on reselling the equipment, as it is proprietary to the Chem-Dry franchise system and can only be sold, leased, or rented under specific conditions, such as selling to another Chem-Dry franchisee with CDI's approval or as permitted in writing by CDI.
Upon termination or expiration of the franchise agreement, the franchisee must cooperate with Chem-Dry to arrange for the return of the equipment to a location designated by CDI, with CDI covering the freight costs, unless the franchisee sells the equipment to another Chem-Dry franchisee with CDI's consent. The franchisee is also responsible for maintaining the equipment properly, insuring it, and keeping it free from liens and encumbrances, ensuring its lawful use and compliance with all applicable regulations.