When transferring a Chem Dry franchise, what agreement must the franchisee and their family members make regarding future activities?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
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FRANCHISEE and its transferring Owners (and any spouses or other immediate family members) acknowledge in a writing delivered to CDI that each of them will not, for two (2) years beginning on the transfer's effective date, engage in any of the activities proscribed in Section 16.D. below;
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to the 2024 Chem Dry Franchise Disclosure Document, when transferring a franchise, the franchisee and their transferring owners, including spouses or immediate family members, must acknowledge in writing that they will not engage in activities prohibited in Section 16.D for two years following the transfer's effective date. This agreement must be delivered to Chem Dry, Inc. (CDI). This clause ensures that the previous franchisee and their family do not immediately start a competing business that could undermine the new franchisee's success.
Section 16.D likely contains specific restrictions on competitive activities, which the transferring parties must agree to abide by. This non-compete agreement is a standard practice in franchising to protect the brand and the investment of the new franchisee. The specific activities restricted would be detailed in Section 16.D of the franchise agreement, which is not provided in the excerpt.
Prospective franchisees should carefully review Section 16.D of the franchise agreement to understand the full scope of these restrictions. It is important to understand what activities are prohibited and the geographic area covered by the non-compete clause. Franchisees should also consider how this restriction might affect their future business plans and those of their family members before deciding to transfer the franchise.