Is prior written approval required from Chem Dry for any Transfer of the franchise agreement?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
r. the transfer must be made in compliance with any laws that apply to the transfer, including state and federal laws governing the offer and sale of franchises;
s.
FRANCHISEE has corrected any existing deficiencies of the BUSINESS of which CDI has notified FRANCHISEE, and/or (ii) CDI permits, and the transferee agrees (if the transfer is of this Agreement) to upgrade the BUSINESS (including the equipment and the van(s) to be transferred to the transferee) in accordance with CDI's then current requirements and specifications for entering or transferred CHEM-DRY Businesses within the time period CDI specifies following the effective date of the transfer;
- t.
FRANCHISEE and its transferring Owners (and any spouses or other immediate family members) acknowledge in a writing delivered to CDI that each of them will not, for two (2) years beginning on the transfer's effective date, engage in any of the activities proscribed in Section 16.D. below;
- u. e have approved the material terms and conditions of the transfer, the form or purchase and sale agreement, and determined that the price and terms of payment will not adversely affect the transferee's operation of the BUSINESS.
The purchase agreement between FRANCHISEE and the transferee must include: (a) a dollar breakdown of the sale price allocated to goodwill, covenant not to compete, van(s), cleaning equipment, cleaning supplies, and office equipment and supplies; and (b) a statement that FRANCHISEE has made a full disclosure to the transferee and that the parties have has agreed upon the disposition of all of FRANCHISEE'S outstanding obligations and accounts receivable;
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, prior written approval is required from Chem Dry for any transfer of the franchise agreement. Specifically, Chem Dry must approve the material terms and conditions of the transfer, the form of purchase and sale agreement, and determine that the price and terms of payment will not adversely affect the transferee's operation of the business.
Additionally, the franchisee must ensure compliance with all applicable laws, including state and federal laws governing the offer and sale of franchises. The franchisee must also correct any existing business deficiencies that Chem Dry has notified them about. If deficiencies are not corrected, Chem Dry may permit, and the transferee must agree, to upgrade the business, including equipment and vans, to meet Chem Dry's current standards for new or transferred businesses within a specified timeframe.
Furthermore, the franchisee and their transferring owners must acknowledge in writing that they will not engage in any activities proscribed in Section 16.D for two years following the transfer's effective date. The transferee must also purchase or obtain all equipment that Chem Dry requires to operate a Chem Dry business, if it is not already included in the transaction. The purchase agreement must include a detailed breakdown of the sale price allocated to various assets like goodwill, covenant not to compete, vans, cleaning equipment, and supplies. It must also state that the franchisee has made full disclosure to the transferee and that both parties have agreed on the disposition of all outstanding obligations and accounts receivable.
Chem Dry may review all information regarding the business that the franchisee provides to the transferee, including the purchase agreement. Chem Dry has the option to correct any information it believes is inaccurate and provide the transferee with copies of any reports the franchisee has given Chem Dry or that Chem Dry has created regarding the business. These stipulations ensure that the transfer process is compliant, maintains brand standards, and protects the interests of both Chem Dry and the incoming franchisee.