What secures the Chem-Dry franchisee's obligation to pay CDI for the equipment?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
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, a security interest in the equipment is granted to CDI to secure the franchisee's obligation to pay for the equipment if CDI financed any portion of the purchase. This is detailed in the Equipment Sales and Security Agreement. The franchisee agrees to purchase the equipment from CDI based on the payment terms outlined in the schedule.
Specifically, the equipment purchased under the agreement is referred to as "the Equipment." The security interest granted to CDI ensures that the franchisee fulfills their payment obligations and disposes of the equipment according to the franchise agreement. This security interest is only applicable if CDI financed any part of the equipment purchase.
Upon delivery of the equipment, the risk of loss and title transfer to the franchisee, but this is subject to any security interest retained by CDI under the agreement. The franchisee is required to inspect the shipment promptly and must report any defects or deficiencies to CDI within two business days after delivery. Failure to report any issues within this timeframe means the franchisee accepts the equipment, and all sales are considered final.