What is the purpose of the Chem Dry Equipment Purchase Schedule?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
This Agreement is made and entered into as of The Effective Date by and between Franchisee and CDI, 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 payment terms set forth in the Schedule. The equipment purchased under this Agreement shall be referred to as the "Equipment." To secure Franchisee's obligations to pay CDI for the Equipment, in the event CDI financed any portion of the purchase of the Equipment, and to dispose of the Equipment in accordance with the Franchise Agreement, Franchisee has granted to CDI the security interest in the Equipment set forth herein.
SHIPMENT, TITLE & RISK OF LOSS. CDI will arrange for shipment of the Equipment on the Schedule to Franchisee. Risk of loss and title to the Equipment transfers to Franchisee upon delivery, subject to any security interest of CDI retained under this Agreement. Franchisee shall inspect each shipment promptly upon receipt and will be deemed to accept the Equipment as conforming to the Schedule unless any defects or deficiencies are noted to CDI within 2 business days after delivery. Franchisee agrees, if no defects or deficiencies are reported within this time period, all sales are final.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the Equipment Purchase Schedule outlines the franchisee's agreement to purchase equipment from Chem Dry, Inc. (CDI). This schedule is part of the Equipment Sales and Security Agreement and lists the tangible equipment the franchisee is buying, along with the payment terms. The schedule also secures the franchisee's obligation to pay CDI for the equipment if CDI finances any portion of the purchase. This agreement ensures that the equipment is used according to the franchise agreement.
Upon delivery, the franchisee takes on the risk of loss and title to the equipment, though CDI retains a security interest if they financed the purchase. The franchisee must inspect the equipment upon arrival and report 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 Purchase Schedule addresses the transfer of equipment ownership. The franchisee can sell the equipment to another Chem Dry franchisee in good standing, but CDI has the first right of refusal and must approve the transaction. If the franchisee terminates or does not renew the franchise agreement but owns another Chem Dry franchise, the equipment can be transferred to that franchise. CDI may also repurchase the equipment based on a schedule that considers wear and tear and regular maintenance. This ensures that the equipment remains within the Chem Dry franchise network and that CDI has some control over its disposition.
In summary, the Equipment Purchase Schedule serves to formalize the purchase of equipment, secure CDI's financial interests, and control the use and transfer of proprietary equipment within the Chem Dry franchise system. It protects both the franchisee and franchisor by clearly defining the terms and conditions related to the equipment, its use, and its eventual disposition.