Under what condition will a Chem Dry franchisee pay twice the monthly franchise fee?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
FRANCHISEE agrees to pay to CDI, or its affiliates, within fifteen (15) days after the effective date of the termination or expiration of this Agreement, or such later date that the amounts due to CDI are determined, all amounts owed to CDI, or its affiliates, including the unpaid balance of the Business Note and, as liquidated damages ("Liquidated Damages")
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, a franchisee may be required to pay what amounts to double their monthly franchise fee as liquidated damages if the franchise agreement is terminated early. Specifically, if the agreement is terminated before the end of its term, the franchisee must pay the monthly franchise fee multiplied by the number of months remaining in the term. This is considered liquidated damages and not a penalty.
For a prospective Chem Dry franchisee, this means that terminating the agreement early can result in significant financial penalties. The amount due will depend on how far into the term the agreement is terminated. For example, if a franchisee terminates with 24 months remaining and the monthly fee is $500, they would owe $12,000.
This provision is designed to compensate Chem Dry for the anticipated losses resulting from the early termination of the franchise agreement. It is important for franchisees to carefully consider the length and terms of the agreement, as well as their long-term business plans, to avoid potential penalties for early termination. Franchisees should consult with legal and financial advisors to fully understand the implications of this clause.