What obligations of the franchisee must the transferee assume in a Chem Dry franchise transfer?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
r(s) (if the transferee is an Entity) shall submit a complete CDI franchise application to CDI and meet CDI's then applicable standards and qualifications for a new BUSINESS;
- c. FRANCHISEE and its owners, and the transferee is of good character and has sufficient business experience, aptitude, and financial resources to operate the BUSINESS;
- d. the transferee has assumed or will assume in writing all of FRANCHISEE'S obligations incurred in connection with this Agreement and the conduct of the BUSINESS;
- e. FRANCHISEE has paid all amounts owed to CDI and its affiliates, suppliers, and vendors, and have submitted all required reports and statements, and if still outstanding, pays off the Business Note;
- f. the proposed transferee and its owners, affiliates, and owners' immediate family members are not engaged in a competitive business;
- g. you provide us with written authorization to release to the transferee any and all information about the operation of the BUSINESS which we have collected;
- h. the transferee pays the then current fee and satisfactorily completes CDI's then current initial training program;
- i. the transferee shall (if the transfer is of this Agreement), or FRANCHISEE shall (if the transfer is of a controlling ownership interest in FRANCHISEE or one of its Owners), sign CDI's then current form of franchise agreement, the personal guaranty and all other required exhibits, any and all of the provisions of which may differ materially from any and all of those contained in this Agreement, but which franchise agreement will not provide for payment of an initial license fee or purchase of an Initial Package;
- j.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, a transferee in a franchise transfer must assume certain obligations of the franchisee. Specifically, the transferee must assume in writing all of the franchisee's obligations incurred in connection with the Franchise Agreement and the conduct of the business. Additionally, the transferee must agree to be bound by all outstanding obligations to customers and clients of the business.
Furthermore, if Chem Dry notifies the franchisee of any existing business deficiencies, the franchisee must correct them. However, Chem Dry may permit the transferee to agree to upgrade the business, including equipment and vans, according to Chem Dry's current requirements for new or transferred Chem Dry businesses within a specified time period after the transfer's effective date. The transferee may also be required to sign Chem Dry's then-current form of franchise agreement, personal guaranty, and all other required exhibits, which may differ materially from the original agreement, although this new agreement will not require payment of an initial license fee or purchase of an Initial Package.
In addition to the above, the purchase agreement between the franchisee and the transferee must include a dollar breakdown of the sale price allocated to various assets such as goodwill, covenant not to compete, vans, cleaning equipment, cleaning supplies, and office equipment and supplies. The agreement must also state that the franchisee has made a full disclosure to the transferee and that the parties have agreed upon the disposition of all of the franchisee's outstanding obligations and accounts receivable. These measures ensure transparency and clarity in the transfer process, protecting both the transferee and Chem Dry's interests.