What is the procedure for a Chem-Dry franchisee to sell the equipment to another franchisee?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
Sell the Equipment to another Chem-Dry Franchisee in good standing under its franchise agreement at a mutually acceptable price. CDI has first right of refusal to purchase the Equipment and must approve any transaction. If CDI financed any portion of the purchase price of the Equipment, the transferee will pay the proceeds to CDI if there is any outstanding balance under the Schedule for the Equipment prior to transfer of the Equipment. At the time of transfer Franchisee's account with CDI must be current and the purchasing Franchisee may not have any pending default under any agreement with the proposed transferee.
If Franchisee is terminating or not renewing the Franchise Agreement and Franchisee owns another Chem-Dry franchise, the Equipment (and the liability for any amount owing on the purchase price of the Equipment) will be transferred to that franchise upon written request.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, a franchisee can sell their equipment to another Chem-Dry franchisee who is in good standing under their franchise agreement. The price must be mutually acceptable to both parties. However, Chem-Dry has the first right of refusal to purchase the equipment themselves, and they must approve any transaction between franchisees. This means a franchisee cannot simply sell their equipment to whomever they choose; Chem-Dry retains control over these transactions.
If Chem-Dry financed any portion of the equipment's purchase price, the purchasing franchisee is required to pay the proceeds to Chem-Dry if there is an outstanding balance on the equipment prior to the transfer. This protects Chem-Dry's financial interests in the equipment. Additionally, the selling franchisee's account with Chem-Dry must be current at the time of the transfer, and the purchasing franchisee cannot have any pending defaults under any agreement with the selling franchisee. This ensures that both parties are in good financial standing with Chem-Dry and each other.
If a Chem-Dry franchisee is terminating or not renewing their Franchise Agreement but owns another Chem-Dry franchise, the equipment (and the liability for any amount owing on the purchase price of the equipment) will be transferred to that franchise upon written request. This provides an alternative to selling the equipment to another franchisee or back to Chem-Dry, allowing the franchisee to continue using the equipment in another of their Chem-Dry businesses. This clause appears to apply only when the franchisee has multiple Chem-Dry locations.