What are the potential liabilities upon default of a Clear Pest Pros financing agreement?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
ee for a Standard Territory.
| Obligation | Section in Franchise Agreement | Disclosure Document Item | |
|---|---|---|---|
| m. Maintenance, | Sections 7 and 11 | None | |
| appearance and | |||
| remodeling requirements | |||
| n. Insurance | Sections 7.C | Items 6, 7 and 8 | |
| o. Advertising | Sections 1.C, 1.D, 1.E, 2.G, 3.B, 4 and 7.A | Items 6, 8 and 11 | |
| p. Indemnification | Section 14.C | Items 6, 8 and 12 | |
| q. Owner’s participation/ | Sections 1.C, 1.H, 7.A and 8 | Items 11 and 15 | |
| management/ staffing | |||
| r. Records/reports | Sections 3.B and 7.D | Items 6, 11 | |
| s. Inspections and audits | Section 8 | Item 6, 11 and 17 | |
| t. Transfer | Section 10 | Items 6 and 17 | |
| u. Renewal | Section 11 | Item 6 and 17 | |
| v. Post-termination | Sections 6 and 13 | Item 17 | |
| obligations | |||
| w. Non-competition | Sections 6 and 13.D | Item 17 | |
| covenants | |||
| x. Dispute resolution | Section 15.F | Item 17 | |
| y. Personal Guaranty | Exhibit A-3 to the Franchise Agreement | Item 15 | |
| Monthly Payment | Varies depending on amount financed and term. | ||
| Prepayment Penalty | None | ||
| Security Required | Personal Guaranty | ||
| Guaranty | Personal Guaranty | ||
| Liability upon Default | Termination or other loss of Franchise; you must also pay entire amount due and our attorneys’ fees and court costs in collecting debt | ||
| Loss of Legal Rights Upon Default | You must waive presentation for payment, demand, notice of non- payment, protest, and all other demands and notices required by law (statutory or otherwise) | If you would like to finance a portion of the Initial Franchise Fee, and you meet our credit standards, you may do so through a promissory note (the "Note"), which is currently attached as Exhibit B. You must make a down payment of at least 50% of the Initial Franchise Fee. We are currently offering an APR of 10% but reserve the right to adjust the APR being offered up to 15%, based on your credit history. We will not adjust APR of the Note once your Franchise Agreement has been signed. A late fee of five percent (5%) or $50, per week, whichever sum is greater, will be collected if you fail to make timely payments or your payments are returned to us with non-sufficient funds. The only security we require is a personal guaranty of the Note by you and by all the owners, as well as all respective spouses, of the company. The personal guaranty will require the owners of the franchisee entity to personally guaranty and be personally bound by all of the obligations of the Note, including payment. |
The term of the Note will be 12 months to 24 months, as agreed between you and us. You may prepay the Note without penalty at any time during its term. If you fail to make any payment, we can call the Note and demand immediate payment of the full outstanding balance. We can also terminate your Franchise Agreement if you fail to make payments as agreed; however, before your Franchise Agreement can be terminated, you will receive a notice of default and have a ten-day period to cure the default. The Note shall survive termination of the Franchise Agreement.
If you enter into the Note, you will agree to waive presentation for payment, demand, notice of non-payment, protest, and all other demands and notices required by law (statutory or otherwise). In the event that you should default under the Note, and legal proceedings are commenced to collect the indebtedness of the note, you agree to pay all costs and expenses, including reasonable attorney fees, incurred in the collection of the Note. A sample Note is attached to this Disclosure Document as Exhibit B.
Other than described above, we will not guarantee any notes, leases or obligations.
Source: Item 10 — FINANCING (FDD pages 38–39)
What This Means (2025 FDD)
According to Clear Pest Pros's 2025 Franchise Disclosure Document, if a franchisee defaults on their financing agreement, several liabilities may arise. The franchise could face termination or other loss of the franchise. Additionally, the franchisee will be responsible for paying the entire outstanding amount due, along with Clear Pest Pros's attorneys' fees and court costs incurred while collecting the debt. The franchisee must also waive presentation for payment, demand, notice of non-payment, protest, and all other demands and notices required by law.
Clear Pest Pros requires a personal guaranty of the Note by the franchisee and all owners, as well as their respective spouses. This personal guaranty means that these individuals are personally bound by all obligations of the Note, including payment. If the franchisee fails to make any payment, Clear Pest Pros can demand immediate payment of the full outstanding balance.
Before the Franchise Agreement is terminated, the franchisee will receive a notice of default and have a ten-day period to cure the default. However, the Note shall survive termination of the Franchise Agreement, meaning the franchisee's payment obligations continue even if the franchise is terminated. In the event that legal proceedings are commenced to collect the indebtedness of the note, the franchisee agrees to pay all costs and expenses, including reasonable attorney fees, incurred in the collection of the Note.
Prospective Clear Pest Pros franchisees should carefully consider these potential liabilities and consult with a financial advisor before entering into a financing agreement. Understanding the terms of the promissory note and the implications of the personal guaranty is crucial to avoid unexpected financial burdens in the event of default.