What rights does a Chem Dry franchisee have to the service being licensed?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
of or related to the application was true, correct and complete as of the time of submission and is true, correct and complete as of the Effective Date. Such application has been approved by CDI in reliance upon all of the representations made therein. Subject to the terms and conditions of this Agreement, CDI hereby grants to FRANCHISEE a non-exclusive franchise to use the Marks and the Franchise System (the "Franchise") to operate a CHEM-DRY Business (the "BUSINESS") in the area as defined in the Summary Page to this Agreement (the "Franchised Area") and to use the Marks in the operation thereof from the Effective Date of this Agreement for a term (the "Term") beginning on the Effective Date and ending five (5) years from the Payment Start Date as referenced in Section 8.B. of this Agreement, or, if this Agreement pertains to the transfer of an existing Chem-Dry Business or is a Renewal Agreement, ending five (5) years from the Effective Date of this Agreement. In connection with the operation of the BUSINESS, FRANCHISEE must offer and perform carpet and area rug cleaning, upholstery cleaning, spot removal applying anti-allergen and deodorizer, and protecting services, including removing red stains, treating pet urine odor on carpets and imparting stain resistance to carpet fibers that we mandate, and such other services which may from time to time be changed, specified, and/or directed by CDI (the "Required Services"). FRANCHISEE also may, upon consent or request of CDI, offer and perform other services that CDI first approves, which may require certification by successful completion of additional training and/or purchase of additional equipment and cleaning solutions ("Additional Services"). This Agreement refers to the Required Services and the Additional Services as the "Approved Services." CDI reserves the right to change the lists of Required Services and Approved Services at any time. As of the Effective Date, the list of Additional Services includes leather and vinyl cleaning, carpet repair, carpet spot dyeing, vinyl composite tile cleaning services, wood floor cleaning, applying anti-allergen and deodorizer, and dryer vent cleaning. CDI may condition the offer and sale, or continuation of the offer and sale, of Additional Services and products in its sole discretion, and to require franchisees which offer and perform such Additional Services to be certified by successful completion of an additional training and/or the purchase of additional equipment and cleaning solutions. Termination or expiration of this Agreement shall constitute a termination or expiration of the Franchise.
D. FRANCHISED AREA
The number of franchises which can operate and perform CHEM-DRY Businesses within the Franchised Area at any given time is determined by dividing the current population of the area by
sixty thousand (60,000). The nearest whole number to the quotient (the "Maximum Number") is the maximum number of franchises that CDI may grant in the Franchised Area; provided, however, that, in addition, another franchisee or a third party designated by CDI may service national accounts in the Franchised Area if FRANCHISEE elects not to service a national account or if a national account elects not to do business with FRANCHISEE. The Franchised Area will be determined by CDI based on, among other things, population, population density, geographical terrain and market potential. Based on population changes, the Maximum Number may increase or decrease from time to time and may not remain constant; however, the Maximum Number only affects CDI's ability to grant franchises and no franchise will be terminated solely as a result of a decrease in the Maximum Number. FRANCHISEE is in compliance with this Agreement when no event or circumstance has occurred that will give CDI the right to terminate this Agreement under Section 15, whether or not CDI has given notice of default, non-compliance or termination to FRANCHISEE.
FRANCHISEE agrees to operate and conduct business from a single location within the nonexclusive Franchised Area from which FRANCHISEE may operate as many crews, teams, sales forces and vans as necessary. In the event FRANCHISEE has multiple franchises, a separate cleaning crew must be available for each franchise to perform requested work within the Franchised Area for the Approved Services.
FRANCHISEE agrees to advertise and solicit business for the authorized services within the Franchised Area only. FRANCHISEE further agrees that FRANCHISEE will accept and perform only those jobs that are within the Franchised Area.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, a franchisee is granted a non-exclusive franchise to use the Chem Dry marks and franchise system to operate a Chem Dry business within a defined area. This area is specified in the Summary Page of the Franchise Agreement. The franchise term lasts for five years, starting from the Payment Start Date, or from the Effective Date if it's a transfer or renewal agreement.
As part of operating the Chem Dry business, the franchisee must offer and perform specific services mandated by Chem Dry. These "Required Services" include carpet and area rug cleaning, upholstery cleaning, spot removal, applying anti-allergen and deodorizer, protecting services, removing red stains, treating pet urine odor, and imparting stain resistance to carpet fibers. Chem Dry retains the right to modify these required services over time. Franchisees may also offer additional services approved by Chem Dry, which may require further training or equipment purchases.
Chem Dry reserves significant rights, including granting franchises to others inside or outside the franchisee's area and developing or distributing products and services using the Chem Dry marks through various channels. The franchisee's rights are limited to the express terms of the franchise agreement, and Chem Dry retains all other rights related to the Chem Dry business and franchise system. Franchisees are expected to operate from a single location within their designated area but can manage multiple crews and vans. They must also focus their advertising and business solicitation within this franchised area, with penalties, such as a $5,000 fine or termination, for performing jobs outside of it.
Prospective franchisees should understand that while they have the right to operate a Chem Dry business using the brand's system and marks, this right is non-exclusive and subject to Chem Dry's control and modifications. The franchisee's success depends on their business abilities and adherence to Chem Dry's standards, and they acknowledge the business risks involved. Additionally, franchisees must acknowledge that Chem Dry's affiliates may offer similar services, potentially creating competition within the franchised area.