What is the maximum price Crawlspace Medic might pay for a franchisee's business vehicle upon termination?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
operation; or terminate the Franchise Agreement without cause.
| Section in | |||
|---|---|---|---|
| Franchise | |||
| Provision | Agreement | Summary | |
| i. | Franchisee's obligations on termination/ non-renewal | Article 18 | Upon termination, you must: cease operations; cease to identify yourself as a Crawlspace Medic franchisee; cease to use the Marks; cancel any assumed name registration that contains any Mark; pay us and our affiliates all sums owing; pay us any damages, costs or expenses we incur in obtaining any remedy for any violation of the Franchise Agreement by you, including, but not limited to attorney's fees; deliver to us all Confidential Information, the Operations Manual and all records and files related to your Franchised Business; comply with the non-disclosure and non competition covenants; sell to us, at our option, all furnishing, fixtures, equipment, inventory and supplies of your Franchised Business; and assign, at our option, your telephone numbers, directory and internet listings, and social media and software accounts. We also reserve the righ |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 33–38)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, upon termination of the franchise agreement, Crawlspace Medic has the option to purchase the franchisee's business vehicle. The purchase price will be the lesser of the vehicle's current market value or $5,000.00. This means that regardless of the vehicle's actual market value at the time of termination, Crawlspace Medic will not pay more than $5,000 for it.
This provision has significant financial implications for a prospective Crawlspace Medic franchisee. Franchisees should consider the potential depreciation of their business vehicle over the term of the franchise agreement, which is five years, as stated in the FDD. If the vehicle's market value is higher than $5,000 at the time of termination, the franchisee will only receive $5,000. Conversely, if the market value is less than $5,000, the franchisee will receive the lower market value.
It is important for prospective franchisees to understand that this clause could result in a financial loss if the vehicle is well-maintained and retains a market value higher than the capped amount of $5,000. Franchisees should factor this potential loss into their financial projections and business planning. This type of clause is not uncommon in franchising, as it allows the franchisor to acquire assets at a predictable cost, but franchisees need to be aware of the potential financial impact.