Under what circumstances does Dryject have the right to step in and operate the franchised business?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
33. STEP-IN RIGHTS
- (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 'step-in rights,' which allow them or their designee to operate the franchised business under specific conditions. These rights are activated if a material default occurs under the franchise agreement and remains unresolved, cannot be resolved, or if the franchisee's actions jeopardize the integrity of Dryject's trademarks or system. Dryject believes this right is essential to protect the brand's value and integrity.
Dryject may exercise these step-in rights if the franchisee is unable to operate the business due to absence or incapacitation caused by illness, accident, injury, or death. They can also step in if the franchisee fails to meet their monetary obligations to Dryject or other parties, or if the franchisee fails to remove non-consensual liens or encumbrances against the franchised business. Additionally, Dryject can step in if they determine that significant operational problems necessitate their temporary management of the business.
During the period that Dryject exercises its step-in rights, all gross revenues from the franchised business will be maintained in a separate account. Dryject will use this account to cover all business expenses, including royalty service fees, marketing fund contributions, and reasonable compensation and expenses for their representatives. The franchisee is required to hold Dryject and its representatives harmless for any actions or omissions that occur during this temporary operation and must also cover Dryject's reasonable attorney's fees and costs arising from the exercise of these rights. It is important to note that Dryject's step-in rights do not prevent them from exercising any other rights they may have under the agreement, including termination.