How are Chem Dry renewal fees recognized?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
for such refusal. If CDI'S notice indicates that CDI will permit FRANCHISEE to obtain a renewal franchise, CDI may condition such right upon FRANCHISEE'S continued compliance with this Agreement, including being current in financial obligations to CDI, and any other agreement between CDI and its affiliates and FRANCHISEE.
B. GRANT OF A RENEWAL FRANCHISE
If FRANCHISEE qualifies for a renewal franchise, FRANCHISEE agrees to sign the franchise agreement CDI then uses to grant franchises for new CHEM-DRY Businesses (modified as necessary to reflect the fact that it is for a renewal franchise), which may contain provisions that differ materially from any and all of those contained in this Agreement, including without limitation, increased or additional fees and new product or service offerings as Required Services or Additional Services. At the time FRANCHISEE signs the renewal franchise agreement, FRANCHISEE will pay CDI a renewal fee as set forth on the Summary Page of this Agreement.
C. AGREEMENTS/RELEASE
If CDI grants a renewal franchise, CDI and FRANCHISEE and the owner(s) of FRANCHISEE shall execute CDI's then current form of franchise agreement and such ancillary agreements as are used in offering franchises for the ownership and operation of CHEM-DRY Businesses (with appropriate modifications to reflect the fact that the agreements relate to the grant of a renewal franchise; including but not limited to, that FRANCHISEE shall not have a right to obtain a renewal franchise beyond the renewal term), and FRANCHISEE and its owner(s) shall execute a general release, in a form satisfactory to CDI, releasing, to the extent permitted by applicable law, any and all claims against CDI and its respective affiliates, shareholders, officers, directors, employees and agents.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, if a franchisee qualifies for a renewal franchise, they must sign the current franchise agreement used for new Chem-Dry businesses, with modifications to reflect that it is a renewal. This new agreement may contain provisions that differ materially from the original agreement, potentially including increased or additional fees and new product or service offerings.
At the time the franchisee signs the renewal franchise agreement, they will be required to pay Chem Dry a renewal fee. The specific amount of this renewal fee is detailed on the Summary Page of the agreement.
Additionally, if Chem Dry grants a renewal franchise, both Chem Dry and the franchisee, along with the franchisee's owners, must execute Chem Dry's current form of franchise agreement and any ancillary agreements used for offering franchises. These agreements will be modified to reflect that they pertain to a renewal franchise, with the franchisee not having the right to obtain a renewal franchise beyond the renewal term. The franchisee and its owners must also execute a general release, in a form satisfactory to Chem Dry, releasing any and all claims against Chem Dry and its affiliates. Failure to sign these agreements and release within the specified timeframe will be deemed an election by the franchisee not to acquire a renewal franchise.