What specific monetary obligations must be unpaid for Dryject to exercise its step-in rights?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) If a material default under this Agreement occurs and remains uncured, or is not subject to cure, or if Your actions jeopardize the integrity of the Marks or System, then You authorize Us or Our designee to operate the Franchised Business for as long as, in Our reasonable judgment, it is necessary or practical. You acknowledge that this right to step-in is necessary to preserve the value and integrity of the Marks and System. Even if We exercise this right to step in, You agree that We do not lose or waive a right to exercise any other rights or remedies which We may have legally under this Agreement. Among the reasons We may act under these step-in rights are:
- (i) We reasonably determine that You are unable to operate the Franchised Business because You are absent or incapacitated because of illness, accident, injury or death;
- (ii) You have not paid Your monetary obligations to Us or others when they are due;
- (iii) You have not removed non-consensual liens or encumbrances which have been placed against the Franchised Business; or,
- (iv) We determine that material operational problems require that We operate the Franchised Business for a period of time.
- (b) During a step-in period, We will maintain in a separate account, all Gross Revenues of the Franchised Business. From that account We will pay all expenses of the Franchised Business, which will include the Royalty Service Fee, all Marketing Fund contributions or payments, and reasonable compensation and expenses for Our representatives. If these step-in rights are exercised, You agree to hold Us harmless and hold harmless Our representatives for all actions or omissions which occur during the course of the temporary operation. You agree to pay Our reasonable attorneys' fees and costs which might arise from the exercise of these step-in rights. Nothing in this Section 33 will prevent Us from exercising any other rights which We may have under this Agreement, including the right to terminate the Agreement.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, Dryject has the right to step in and operate a franchised business if the franchisee has not paid their monetary obligations to Dryject or others when due. This is part of Dryject's broader step-in rights, which allow them to take over operations temporarily under certain circumstances to protect the brand and system.
Specifically, if a Dryject franchisee fails to meet their financial responsibilities, Dryject can step in to manage the business. This action is designed to ensure the continued operation of the franchise and to safeguard the Dryject brand's integrity. The FDD does not specify a particular amount or duration of non-payment that triggers this right, only that the monetary obligations are not paid when due.
During the step-in period, Dryject will manage the business's finances, using the gross revenues to cover expenses such as royalty and service fees, marketing fund contributions, and compensation for their representatives. The franchisee is also responsible for Dryject's legal fees and costs associated with the step-in. This arrangement is intended to be temporary, allowing Dryject to stabilize the business and address the financial issues while protecting the overall franchise system.
This provision highlights the importance of maintaining good financial standing as a Dryject franchisee. Failure to pay obligations on time can lead to Dryject taking control of the business, which can have significant implications for the franchisee's ownership and operational control. Prospective franchisees should carefully consider their financial capabilities and ensure they can meet all payment obligations to avoid triggering Dryject's step-in rights.