Are Owners of a Dryer Vent Squad franchise jointly and severally liable under the agreement?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor, in addition to any and all other rights and remedies available to Franchisor as set forth in this Agreement, and, at law and in equity, shall possess the following rights and remedies, each of which are not exclusive of the other and may be/are in conjunction with one another:
- (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.
Source: Item 23 — RECEIPTS (FDD pages 51–207)
What This Means (2024 FDD)
According to the 2024 Dryer Vent Squad Franchise Disclosure Document, Dryer Vent Squad holds the franchisee and the franchisee's owners jointly and severally liable for certain obligations. This means that Dryer Vent Squad can pursue any one or all of the owners for the full amount of the debt or obligation, regardless of their individual ownership percentage or involvement. This liability extends to payments, fees, monetary obligations, financial obligations, interest, and charges owed to Dryer Vent Squad under the Franchise Agreement, Ancillary Agreements, or any other agreements between the franchisee and Dryer Vent Squad. These obligations include, but are not limited to, Royalty Fees and Advertising Contributions, with all payments and obligations accelerated and due immediately upon breach or termination.
Furthermore, Dryer Vent Squad can hold the franchisee and its owners jointly and severally liable for lost revenues, profits, and fees, including Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues, and expenses that would have been paid to Dryer Vent Squad throughout the term of the agreement had a breach not occurred and had Dryer Vent Squad not terminated the agreement. To calculate these damages, the franchisee agrees that it is fair and reasonable to use the franchisee's most recent calendar year Gross Sales. If the franchised business has been open for less than one calendar year, Dryer Vent Squad may use an average of Dryer Vent Squad Business Gross Sales across the System during the year in which the agreement was terminated.
This joint and several liability has significant implications for prospective Dryer Vent Squad franchisees, particularly those entering into the franchise agreement with partners or investors. Each owner could be held responsible for the entire financial obligations of the franchise, even if the default or breach was primarily caused by another owner. This arrangement could expose an individual owner's personal assets to risk if the franchise encounters financial difficulties or breaches the agreement. It is crucial for potential franchisees to fully understand the extent of this liability and to seek legal counsel to assess the risks involved before signing the franchise agreement.