Under what circumstances can Chem Dry unilaterally waive or reduce obligations under the Franchise Agreement?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
CDI and FRANCHISEE may by written instrument unilaterally waive or reduce any obligation of or restriction upon the other under this Agreement, effective upon delivery of written notice thereof to the other or another effective date stated in the notice of waiver. Any waiver granted by CDI shall be without prejudice to any other rights CDI, or its affiliates, may have, and will be subject to continuing review by CDI and may be revoked, in CDI's sole discretion, at any time and for any reason, effective upon delivery to FRANCHISEE of ten (10) days prior written notice. CDI and FRANCHISEE shall not be deemed to have waived or impaired any right, power or option reserved by this Agreement (including, without limitation, CDI's right to demand exact compliance with every term, condition, and covenant or to declare any breach to be a default and to terminate this Agreement before its term expires) by virtue of any custom or practice of the parties at variance with the terms hereof; any failure, refusal or neglect of CDI or FRANCHISEE to exercise any rights under this Agreement or to insist upon exact compliance by the other with its obligations hereunder; any waiver, forbearance, delay, failure or omission by CDI, or its affiliates, to exercise any right, power or option, whether of the same, similar or different nature, with respect to other CHEM-DRY Businesses; the existence of franchise agreements for other CHEM-DRY Businesses which contain provisions different from those
contained in this Agreement; or the acceptance by CDI, or its affiliates, of any payments due from FRANCHISEE after any breach of this Agreement.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, Chem Dry (CDI) has the right to unilaterally waive or reduce obligations of either party under the Franchise Agreement. This waiver or reduction must be documented in writing and becomes effective upon delivery of written notice to the other party, or on another date specified in the waiver notice.
However, any waiver granted by Chem Dry is subject to ongoing review and can be revoked at any time, for any reason, at Chem Dry's sole discretion. To revoke a waiver, Chem Dry must provide the franchisee with ten days' prior written notice. The document also clarifies that Chem Dry's actions or inactions do not constitute a waiver of their rights under the agreement. This includes any custom or practice that varies from the agreement's terms, any failure to enforce compliance, any leniency shown to other Chem Dry businesses, or the acceptance of payments after a breach of the agreement.
This clause gives Chem Dry significant flexibility in managing the franchise relationship. While a waiver could benefit a franchisee in the short term, the franchisee must recognize that Chem Dry can revoke the waiver with only ten days' notice. This could create uncertainty for the franchisee, as a previously waived obligation could be reinstated. Prospective franchisees should carefully consider this provision and discuss its potential implications with Chem Dry during their due diligence.
This type of clause is not uncommon in franchise agreements, as it allows the franchisor to adapt to changing circumstances and address individual franchisee situations. However, the breadth of Chem Dry's discretion in revoking waivers is something a potential franchisee should carefully evaluate. Understanding the circumstances under which Chem Dry might grant and then revoke a waiver is crucial for assessing the overall risk and opportunity of the franchise.