Can the Dryer Vent Squad franchisor terminate the agreement at their sole discretion?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
- (1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
- (2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
- (3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly
and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement. In calculating and determining the foregoing, Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Dryer Vent Squad Business Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. Franchisee agrees that the foregoing is a form of liquidated damages, and that it is fair and reasonable.
Source: Item 23 — RECEIPTS (FDD pages 51–207)
What This Means (2024 FDD)
According to the 2024 Dryer Vent Squad Franchise Disclosure Document, the franchisor has the right to terminate the agreement and market the rights to another party at their sole discretion, without providing compensation to the franchisee. This means Dryer Vent Squad can decide to end the franchise agreement and reassign the territory as they see fit.
In addition to terminating the agreement, Dryer Vent Squad can hold the franchisee liable for all outstanding payments, fees, monetary obligations, and financial obligations. This includes royalty fees, advertising contributions, and any other agreements between the franchisee and franchisor. All payments and obligations become immediately due.
Furthermore, Dryer Vent Squad can hold the franchisee liable for lost revenues, profits, and fees that the franchisor would have received throughout the term of the agreement had the breach not occurred. The FDD specifies that the franchisor may calculate these damages based on the franchisee's most recent calendar year gross sales or, if the business has been open for less than a year, on the average gross sales of Dryer Vent Squad businesses across the system. This calculation assumes that the same level of gross sales would have been earned each year for the remainder of the agreement's term. This is considered a form of liquidated damages and is deemed fair and reasonable by the franchisee.