What happens if a Dryer Vent Squad franchisee fails to repay their loan?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
| Finance Type | e | Operating Territory Type: Single Territory | Operating Territory Type: Double Territory | |
|---|---|---|---|---|
| Amount Financed | Up to $14,000 of Initial Franchise Fee | Up to $28,000 of Initial Franchise Fee | ||
| Down Payment | Minimum of $21,000 | Minimum of $42,000 | ||
| Term | Up to two (2) years | Up to two (2) years | ||
| Finance Charges | Ten percent (10%) APR | Ten percent (10%) APR | ||
| Payment Amount | Depends on amount financed with repayment self-amortized over two (2) year repayment period with monthly installments of principal and interest paid monthly. | |||
| Payment Terms | Payable monthly over two (2) year repayment period with monthly installments of principal and interest paid monthly. No early pre-payment penalty. | |||
| Security Required | Personal guaranty by you and if you are a Corporate Entity then personal guaranty by each individual owner. Additional security in the form of a security agreement related to the assets of the Franchised Business and the filing of a UCC-1. | |||
| Liability Upon Default | Personal liability for the amount financed, plus interest, collection costs and legal fees. Additionally, default of Franchise Agreement and loss of franchise rights in the Franchised Business and other legal and equitable remedies available to us. | |||
| Loss of Legal Rights on Default | Cross-default of Franchise Agreement. Waiver of notice of default and loss of defenses | |||
| Referral Fee | Not applicable. | If you fail to repay your loan, we have the right to terminate your franchise and acquire the rights to operate your Dryer Vent Squad Business directly. We may, in our sole discretion, offer financing to new and existing franchisees who wish to expand with additional Territories. Note payments are not refundable. Note obligations are not refundable. If, at your request, we elect to make financing available to you, you must sign the Note at the time you sign the Franchise Agreement. A copy of the form Note is attached as Exhibit 7 to the Franchise Agreement. |
Source: Item 10 — FINANCING (FDD pages 29–30)
What This Means (2024 FDD)
According to Dryer Vent Squad's 2024 Franchise Disclosure Document, if a franchisee fails to repay their loan, Dryer Vent Squad has the right to terminate the franchise agreement and acquire the rights to operate the Dryer Vent Squad business directly. The franchisee is also personally liable for the amount financed, plus interest, collection costs, and legal fees. Defaulting on the loan also constitutes a default of the Franchise Agreement, leading to a loss of franchise rights in the franchised business, as well as other legal and equitable remedies available to Dryer Vent Squad.
Furthermore, the franchisee waives certain legal rights, including the right to receive notices of default and other legal rights and defenses. These waivers include the rights to diligence, demand, presentment for payment, notice of nonpayment and protest, and notice of amendments or modifications. The franchisee also waives any defense under the statute of limitations and allows that a confessed judgment may be taken against them.
If Dryer Vent Squad offers financing, the franchisee and, if applicable, each individual owner of a Corporate Entity, must provide a personal guaranty. Additional security is required in the form of a security agreement related to the assets of the Franchised Business and the filing of a UCC-1. These measures ensure that Dryer Vent Squad has multiple avenues for recourse in the event of a loan default, protecting their investment and brand reputation.