Who is liable for the actions and decisions of the Operating Partner in a Clean Your Dirty Face franchise?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
We reserve the right to approve the Operating Partner.
In the event that your Operating Partner ceases to own at least a twenty-five percent (25%) ownership interest and voting interest in you, or we disapprove of your Operating Partner, you must recruit a new Operating Partner within sixty (60) days of the change in ownership or disapproval and deliver to us a revised Exhibit A to accurately identify the Operating Partner for our review and approval;
- (6) You agree that the Operating Partner is authorized to deal with us on your behalf for all matters whatsoever that may arise with respect to this Agreement.
Any decision made by the Operating Partner will be final and binding on you and we will be entitled to rely solely on the decision of the Operating Partner without discussing the matter with any other party.
We will not be held liable for any actions based on any decision or actions of the Operating Partner; and
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, the franchisee is liable for the actions and decisions of their Operating Partner. The FDD states that any decision made by the Operating Partner is final and binding on the franchisee. Clean Your Dirty Face will rely solely on the Operating Partner's decisions without discussing the matter with any other party. However, Clean Your Dirty Face will not be held liable for any actions based on any decision or actions of the Operating Partner.
This arrangement has significant implications for a prospective Clean Your Dirty Face franchisee. While the Operating Partner is authorized to act on the franchisee's behalf, the franchisee ultimately bears the responsibility for the Operating Partner's decisions. This means the franchisee needs to carefully select and monitor their Operating Partner, as their actions can directly impact the franchise's operations and financial stability.
This liability structure is not uncommon in franchising, particularly when the franchisee is not directly involved in the day-to-day operations. However, it underscores the importance of due diligence and clear communication between the franchisee and the Operating Partner. Franchisees should have mechanisms in place to stay informed about the Operating Partner's decisions and ensure they align with the franchisee's overall business goals and risk tolerance. Clean Your Dirty Face also retains the right to approve the Operating Partner.