Under what conditions will Chem Dry not unreasonably withhold approval of a franchisee's request to relocate their business to a different franchised area?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
If FRANCHISEE (and its Owners) are in compliance with this Agreement and any other agreement with CDI, then, subject to the other provisions of this Section 13, CDI shall not unreasonably withhold its approval of FRANCHISEE'S request to relocate the BUSINESS to a different franchised area so long as FRANCHISEE meets all of the applicable requirements of Section 13.H. ("Franchised Area Transfer"). FRANCHISEE acknowledges and agrees CDI's approval of the Franchised Area Transfer is limited to determining if FRANCHISEE meets the requirements of Section 13.H. and is not an endorsement by CDI of FRANCHISEE'S decision to relocate the Business or an indicator of FRANCHISEE'S future performance in the new franchised area. In no event is CDI liable for any damages suffered by FRANCHISEE (or its owners) as a result of approving the Franchised Area Transfer.
H. CONDITIONS ON APPROVAL OF FRANCHISED AREA TRANSFER
For any proposed Franchised Area Transfer, all of the following conditions must be met before or concurrently with the effective date of the Franchised Area Transfer:
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- the FRANCHISEE must be in compliance with this Agreement and any other agreement with CDI and its affiliates
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- FRANCHISEE has paid all amounts then due and owed to CDI under this Agreement and the Business Note, and has submitted all required reports and statements;
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- this Agreement is no more than six (6) months from the expiration of its term;
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- FRANCHISEE must sign CDI's then current form of franchise agreement and related documents, any and all of the provisions of which may differ materially from any and all of those contained in this Agreement;
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- FRANCHISEE must not have any unresolved customer service issues;
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- FRANCHISEE must provide CDI with the full and complete Customer List for the Franchised Area being vacated, unless FRANCHISEE has a subsequent operational Chem-Dry business in the Franchised Area;
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- FRANCHISEE pays CDI's then-current Franchised Area Transfer Fee;
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- If the Franchised Area is a Small Market and FRANCHISEE is relocating the Business to a standard sized franchised area, FRANCHISEE will pay the difference between the Initial License Fee paid by FRANCHISEE and CDI's then-current price for a standard-
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, Chem Dry will not unreasonably withhold approval for a franchisee's request to relocate their business to a different franchised area if the franchisee and its owners are in compliance with the Franchise Agreement and any other agreements with Chem Dry. However, this approval is subject to other provisions outlined in Section 13 of the agreement. Chem Dry's approval is specifically limited to determining whether the franchisee meets the requirements of Section 13.H, and it does not act as an endorsement of the relocation decision or a guarantee of future performance in the new area. Chem Dry is not liable for any damages the franchisee may incur as a result of approving the franchised area transfer.
To gain approval for a franchised area transfer, several conditions must be met either before or at the time of the transfer. The franchisee must be in full compliance with the Franchise Agreement and any other agreements with Chem Dry and its affiliates. All due and owed amounts to Chem Dry under the agreement and the Business Note must be paid, and all required reports and statements must be submitted. Additionally, the existing agreement should be no more than six months from its expiration date.
Furthermore, the franchisee is required to sign Chem Dry's then-current form of franchise agreement and related documents, which may contain provisions that differ significantly from the current agreement. The franchisee must also resolve any outstanding customer service issues. The franchisee must provide Chem Dry with the complete customer list for the area being vacated, unless they will continue to operate another Chem Dry business in that area. The franchisee is also responsible for paying Chem Dry's then-current Franchised Area Transfer Fee. If the current franchised area is a small market and the franchisee is moving to a standard-sized area, they will need to pay the difference between their initial license fee and Chem Dry's current price for a standard area.