When transferring a Chem Dry franchise, what post-termination obligations must the franchisee comply with?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
rice allocated to goodwill, covenant not to compete, van(s), cleaning equipment, cleaning supplies, and office equipment and supplies; and (b) a statement that FRANCHISEE has made a full disclosure to the transferee and that the parties have has agreed upon the disposition of all of FRANCHISEE'S outstanding obligations and accounts receivable;
- v. the transferee purchases or obtains all equipment CDI then requires to operate a CHEM-DRY Businesses, if not included in the transaction (including, without limitation, proprietary equipment related to the Franchise); and
- w. FRANCHISEE and its transferring Owners will not directly or indirectly at any time or in any manner (except with respect to other CHEM-DRY Businesses FRANCHISEE owns and operates) identify itself or themselves or any business as a current or former CHEM-DRY Business or as one of CDI's current or former franchisees; use any Mark, any colorable imitation of a Mark, or other indicia of a CHEM-DRY Business in any manner or for any purpose; or utilize for any purpose any trade name, trade or service mark, or other commercial symbol that suggests or indicates a connection or association with CDI.
CDI may, but has no obligation to, review all information regarding the BUSINESS that FRANCHISEE gives the transferee, including the purchase agreement, correct any information that CDI believes is inaccurate, and give the transferee copies of any reports that FRANCHISEE has given CDI or CDI has made regarding the BUSINESS.
D. DEATH OR DISABILITY OF FRANCHISEE OR MAJORITY OWNER; DIVORCE
Upon your death or disability (or the death or disability of an owner of 33% or more of Franchisee (referred to in this document as "your death or disability")), the executor, administrator, conservator, guardian, or other personal representative of Franchisee must transfer your interest in this Agreement or in Franchisee, in accordance with Sections B and C above, to a third party within a reasonable amount of time, but not to exceed six (6) months.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, a franchisee has several obligations to fulfill when transferring their franchise. These obligations ensure a smooth transition and protect Chem Dry's brand and customer relationships.
Specifically, the franchisee and its transferring owners must not identify themselves or any business as a current or former Chem Dry business, except for other Chem Dry businesses they own and operate. They are prohibited from using any Chem Dry marks or anything that suggests a connection with Chem Dry. The franchisee must also ensure that the transferee purchases all required equipment if it's not already included in the transaction. Additionally, the franchisee and its transferring owners must agree in writing not to engage in any activities proscribed in Section 16.D for two years after the transfer date.
Furthermore, Chem Dry may review all information given to the transferee, including the purchase agreement, and correct any inaccuracies. The purchase agreement must include a breakdown of the sale price allocated to various assets like goodwill, equipment, and supplies, and a statement that the franchisee has made full disclosure to the transferee regarding outstanding obligations and accounts receivable. These measures aim to provide transparency and protect the transferee's investment. Compliance with these obligations is essential for a successful franchise transfer.