Under the Chem Dry Lender Addendum, what does the Lender desire to finance?

According to Chem Dry's 2024 Franchise Disclosure Document, the Lender Addendum outlines the terms under which a lender will finance a franchisee's purchase of equipment. Specifically, the Lender desires to finance the purchase of the Equipment by Franchisee and take a security interest in the Equipment as collateral for the financing. This equipment is proprietary to CDI (Chem-Dry, Inc.) and is necessary for the franchisee to fulfill their obligations under the Franchise Agreement.

This arrangement allows a new Chem Dry franchisee to obtain the necessary equipment through financing, using the equipment itself as collateral. Chem Dry maintains certain controls, including restricting the franchisee's right to resell or dispose of the equipment without consent. This ensures that the equipment remains within the Chem Dry system or is recoverable by Chem Dry or the lender if the franchisee defaults.

The Lender Addendum also stipulates that Chem Dry must consent to the financing and security interest, conditioned upon the lender's undertakings as detailed in the addendum. This includes the lender agreeing to certain restrictions on their rights and remedies regarding the equipment, particularly concerning its transfer. For instance, if the lender takes possession of the equipment, they must first offer it for resale to another Chem Dry franchisee. If that is not possible within 60 days, Chem Dry has the option to repurchase the equipment as provided in Section 5 of the Sales Agreement.

For a prospective Chem Dry franchisee, this means that financing options are available for the required equipment, but these options come with specific conditions and limitations to protect Chem Dry's interests and maintain the integrity of the franchise system. Franchisees should carefully review the Lender Addendum and Sales Agreement to understand these conditions and restrictions before entering into any financing agreement.