Under what conditions can CDI repurchase the equipment from a Chem-Dry franchisee, and for what price?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
ipment conforms to the requirements set by CDI under the Franchise Agreement. CDI offers other no warranty and assigns to Franchisee any and all rights to any express or implied warranty of each Equipment manufacturer. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES ON THE EQUIPMENT OFFERED, GIVEN OR PROVIDED BY CDI INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
EQUIPMENT USAGE. Franchisee agrees not to use the Equipment in any business or manner other than in the conduct of the Business pursuant to the Franchise Agreement. Franchisee acknowledges that the Equipment is proprietary to the Chem-Dry franchise system. The Equipment can only be used with Chem-Dry authorized cleaning solutions and consistent with all mixing, application and usage procedures. Any usage contrary to this provision shall be considered to be a breach of the Franchise Agreement and this Agreement. In such event, CDI may demand and shall have the right to repurchase and immediate return of the Equipment from Franchisee for the purchase price of $10.00.
TRANSFER OF OWNERSHIP. Franchisee acknowledges that the Franchise Agreement imposes restrictions and limitations on the resale of the Equipment. Franchisee acknowledges that the Equipment may not be sold, leased, or rented to or used by any other party, except under the conditions stated on the attached repurchase schedule, as provided in the Franchise Agreement, or as permitted in writing by CDI. The Equipment is proprietary and authorized for use only within the Chem-Dry® franchise network. Franchisee covenants that Franchisee will not transfer title to the Equipment except in one of these three ways:
Sell the Equipment to another Chem-Dry Franchisee in good standing under its franchise agreement at a mutually acceptable price. CDI has first right of refusal to purchase the Equipment and must approve any transaction. If CDI financed any portion of the purchase price of the Equipment, the transferee will pay the proceeds to CDI if there is any outstanding balance under the Schedule for the Equipment prior to transfer of the Equipment.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, Chem-Dry can repurchase equipment from a franchisee under specific circumstances. If a franchisee uses the equipment in any business or manner other than conducting business under the Franchise Agreement, or if the franchisee uses the equipment with unauthorized cleaning solutions or inconsistent mixing, application, and usage procedures, it is considered a breach of the Franchise Agreement. In such cases, Chem-Dry has the right to demand and repurchase the equipment for $10.00.
Additionally, if a franchisee is terminating or not renewing their Franchise Agreement and owns another Chem-Dry franchise, the equipment can be transferred to that other franchise upon written request. In this scenario, the liability for any amount owing on the purchase price of the equipment also transfers to the other franchise.
Chem-Dry also has the first right of refusal to purchase the equipment if a franchisee wants to sell it to another Chem-Dry franchisee in good standing. The price in this case would be mutually acceptable, but Chem-Dry must approve the transaction. If Chem-Dry financed any portion of the equipment, the proceeds from the sale must first go to Chem-Dry to cover any outstanding balance. Furthermore, the franchisee's account with Chem-Dry must be current at the time of the transfer, and the purchasing franchisee cannot have any pending defaults under any agreement with the proposed transferring franchisee.
Chem-Dry will also repurchase equipment in accordance with a repurchase schedule, with the repurchase price being a percentage of the original equipment price, assuming reasonable wear and tear and regular maintenance. However, if any components are missing, or if there is damage or excessive wear and tear, Chem-Dry reserves the right to adjust the repurchase price accordingly.