During a dispute resolution process, is a Craters & Freighters franchisee allowed to withhold payment of Insurance Payments?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor is required to engage legal counsel in connection with Franchisee's failure to pay when due any amounts owing to Franchisor or any Affiliate of Franchisor, to submit when due any reports, information or supporting records or otherwise to comply with this Agreement, Franchisee will reimburse Franchisor for any of the above-mentioned costs and expenses which Franchisor incurs.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
Based on the 2025 Craters & Freighters Franchise Disclosure Document, the document does not explicitly address whether a franchisee can withhold insurance payments during a dispute resolution process. However, it does state that if a franchisee fails to pay amounts due to the franchisor or any affiliate, the franchisee will reimburse the franchisor for any costs and expenses incurred in engaging legal counsel to address the failure to pay. This suggests that withholding payments could lead to legal action and associated costs.
While the FDD outlines dispute resolution procedures such as mediation and arbitration, it does not provide specific guidance on payment obligations during these processes. The agreement stipulates that franchisees must pay all monies owed to Craters & Freighters or its affiliates within ten days of termination or expiration of the agreement, but it does not directly address the scenario of withholding payments during an ongoing dispute.
Therefore, a prospective Craters & Freighters franchisee should seek clarification from the franchisor regarding the policy on payment obligations, specifically insurance payments, during a dispute. Understanding the potential consequences of withholding payments, including possible legal action and associated costs, is crucial for making an informed decision about investing in a Craters & Freighters franchise.