Under what conditions can Chem Dry accelerate the Business Note and demand immediate payment?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
ess Note includes a waiver of defenses (or similar provisions).
If you do not make Business Note payments when due, CDI may accelerate the Note and demand immediate payment of the full outstanding principal amount plus accrued interest. CDI may also terminate the Franchise Agreement under Section 15 of the Franchise Agreement. A charge of $50.00 will be assessed for any installments returned unpaid. In the event of collection proceedings, CDI reserves the right to pursue costs associated with the collections, including court costs and attorney fees in accordance with the Business Note and Section 17 of the Franchise Agreement.
CDI has no past or present practice nor any present intent to sell, assign, or discount to a third party, in whole or in part, any note, contract or other instrument executed by you; however, we have the right to do so. If we effect such an assignment, you may be barred from asserting a defense against the assignee that you could assert against CDI.
If the Franchise Agreement is terminated, CDI has the right to declare all obligations owed under the Business Note immediately due and payable.
Source: Item 10 — FINANCING (FDD pages 35–37)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, Chem Dry can demand immediate payment of the full outstanding principal amount plus accrued interest on the Business Note if a franchisee does not make payments when due. Additionally, Chem Dry may terminate the Franchise Agreement under Section 15 of the Franchise Agreement if the franchisee fails to make Business Note payments.
Furthermore, if the Franchise Agreement is terminated for any reason, Chem Dry has the right to declare all obligations owed under the Business Note immediately due and payable. The franchisee is also responsible for any court costs and attorneys' fees for the collection of such amounts if not paid promptly when due. If the franchisee finances the Initial Package with a third party, that financing may also accelerate, making the balance immediately payable if the Chem Dry franchise is terminated.
These terms are typical in franchising, as franchisors need to protect their financial interests. Prospective Chem Dry franchisees should carefully review the Business Note (Exhibit C) and Section 15 of the Franchise Agreement to fully understand the conditions under which Chem Dry can accelerate the Business Note and the consequences of failing to make timely payments or of the franchise agreement being terminated.