Can Deer Solution apply payments received from a franchisee to offset indebtedness for purchases from Deer Solution's affiliates?

According to Deer Solution's 2025 Franchise Disclosure Document, Deer Solution has the authority to allocate payments received from a franchisee towards various outstanding debts. Specifically, Deer Solution can apply these payments to offset any past due indebtedness the franchisee owes for royalty fees, advertising contributions, or purchases made from Deer Solution or its affiliates. This also extends to any interest or other forms of indebtedness the franchisee may have to Deer Solution or its affiliates.

This provision grants Deer Solution significant discretion in managing franchisee payments and ensuring financial obligations are met. For a prospective franchisee, this means that any payments made to Deer Solution could be applied to any outstanding debts, regardless of the franchisee's intended allocation. It is crucial for franchisees to maintain good standing and avoid accumulating debt with Deer Solution and its affiliates to prevent their payments from being diverted to cover past due amounts.

This type of clause is relatively common in franchise agreements, as it protects the franchisor's financial interests and ensures that outstanding debts are addressed promptly. However, franchisees should be aware of this provision and carefully manage their financial relationship with Deer Solution and its affiliates to avoid potential issues with payment allocation. Franchisees should maintain detailed records of all payments and outstanding debts to reconcile their accounts with Deer Solution regularly.