What happens to the accounts receivable of a Cinch I.T. franchise upon termination?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 23: RECEIPTS]
- (x) Assign any and all accounts receivable to Us for collection.
In connection therewith You hereby appoint Us as attorney-in-fact to engage in such collection activities following the termination or expiration of this Agreement and You specifically undertake to refrain from engaging in any such collection activities upon termination or expiration.
We agree to employ good faith efforts, including, where appropriate in Our sole and exclusive judgment, the commencement of legal proceedings, to collect such accounts receivable.
Nothing contained herein shall be construed or deemed to impose any duty or obligation upon Us to collect such accounts receivable and, if all or a portion of such accounts receivable are not collected by Us, You release and waive any claims thereto against Us.
If We are successful in collecting all or a part of such accounts receivable, We shall remit to You such sums collected after first deducting any and all monies owed to Us and Our affiliates; after deducting the pro rata cost of servicing the client(s) with respect to whom the receivables were collected; and, after further deducting Our costs of collection; and
Source: Item 23 — RECEIPTS (FDD pages 60–269)
What This Means (2024 FDD)
According to Cinch I.T.'s 2024 Franchise Disclosure Document, upon termination or expiration of the franchise agreement, the franchisee must assign any and all accounts receivable to Cinch I.T. for collection. The franchisee appoints Cinch I.T. as their attorney-in-fact to engage in collection activities after termination or expiration and must not engage in any collection activities themselves.
Cinch I.T. agrees to employ good faith efforts to collect these accounts receivable, including commencing legal proceedings if deemed appropriate. However, the FDD clarifies that Cinch I.T. is not obligated to collect any accounts receivable.
If Cinch I.T. is successful in collecting the accounts receivable, they will remit the sums collected to the franchisee after deducting any monies owed to Cinch I.T. and its affiliates, the pro rata cost of servicing the client(s) with respect to whom the receivables were collected, and Cinch I.T.'s costs of collection. The franchisee releases and waives any claims against Cinch I.T. if all or a portion of the accounts receivable are not collected.