Does the Healthsource Chiropractic amendment specify any conditions under which the Development Agreement can be breached?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
ithout limitation, the loss of future revenues (which we both agree include the expected amount of Continuing Franchise Fees, Ad Fund contributions, and Technology Fees payable by you for the remainder of the Term of this Agreement); and
c. all costs and expenses, including attorneys' fees, incurred in connection with the termination, collection of the termination fee and/or damages, and audit fees and expenses.
15.4 Withholding of Performance. HealthSource Chiropractic will perform its obligations under this Agreement if you are in full compliance with all or your duties and obligations to HealthSource Chiropractic under this Agreement and the Operations Manual (including any documents incorporated therein). If you are not in such compliance, we may, in our sole judgment, do any or all of the following until you fully correct the breach or default or HealthSource Chiropractic terminates this Agreement:
- a. deny you access to the HealthSource Chiropractic website or Intranet;
b. remove your Franchised Business from the Franchised Business locator page and/or remove your interior pages, on the HealthSource Chiropractic Website;
c. remove your Franchised Business from the list of Franchised Businesses to which inquiries are referred;
d. remove your Franchised Business from the list of Franchised Businesses that are entitled to HealthSource Chiropractic-related discounts from approved vendors; and/or
e. remove your Franchised Business from the list of Franchised Businesses that are approved to participate in national or other alliance programs.
HealthSource Chiropractic may take any or all of these actions in addition to or instead of giving you notice of default and/or termination under this Agreement. You acknowledge and agree that HealthSource Chiropractic's withholding of performance services in accordance with this Section 15.4 will not constitute a breach of this Agreement and/or a defense to the enforcement by us of any provision of this Agreement, including the right to receive payment of Continuing Franchise Fees as provided in Section 6.2. You also acknowledge and agree that, should we choose to withhold performance rather than terminate this Agreement, HealthSource Chiropractic's failure to exercise its right to terminate this Agreement will in no way constitute a waiver of its subsequent right to terminate this Agreement for the specified default or for any other default or to exercise any other remedies available to us under this Agreement, at law, or in equity.
16. RIGHTS AND OBLIGATIONS OF COMPANY AND FRANCHISE OWNER UPON TERMINATION OR EXPIRATION OF THE FRANCHISE.
16.1 Payment of Amounts Owed to HealthSource Chiropractic. You agree to pay us within five (5) days after the effective date of termination or expiration of the Franchise, or any later date that the amounts due to us are determined, all amounts owed to us or our affiliates which are then unpaid including, without limitation, any unpaid Initial Franchise Fee, any unpaid
Continuing Franchise Fees, and any termination fee, damages, costs or expenses owed by you pursuant to Section 15.3, together with any audit costs and expenses owed by you pursuant to Section 13.2.
- 16.2 Marks. Use of the Marks and Copyrightable Works after the termination or expiration of the Clinic Franchise will constitute the unlawful use of our intellectual property rights, which include trademarks and service marks. You agree that after the termination or expiration of the Franchise you will:
- a. not directly or indirectly at any time identify any business with which you are associated as a current or former HealthSource Chiropractic franchise or franchisee;
- b. not use any Mark, any colorable imitation of any Mark, or any Copyrightable Worksin any manner or for any purpose, or use for any purpose any trademark or other commercial symbol that suggests or indicates an association with us;
- c. return to us or destroy (whichever we specify) all customer lists, forms and materials containing any Mark or any Copyrightable Works or otherwise relating to a HealthSource Chiropractic franchise;
- d.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
The 2025 Healthsource Chiropractic Franchise Agreement outlines specific conditions under which Healthsource Chiropractic may withhold performance of its obligations, which could lead to a breach of the agreement. According to Section 15.4, Healthsource Chiropractic will perform its obligations only if the franchisee is in full compliance with all duties and obligations under the agreement and the Operations Manual. If the franchisee fails to comply, Healthsource Chiropractic has the right to take actions such as denying access to the website or intranet, removing the franchised business from the locator page, removing the business from referral lists, discount lists, and alliance programs.
Healthsource Chiropractic can take these actions instead of or in addition to providing a notice of default or termination. The agreement explicitly states that Healthsource Chiropractic's withholding of performance services will not be considered a breach of the agreement, nor will it serve as a defense against the enforcement of any provision, including the right to receive Continuing Franchise Fees. Furthermore, if Healthsource Chiropractic chooses to withhold performance rather than terminate the agreement, it does not waive its right to terminate the agreement later for the same or any other default, or to exercise any other available remedies.
Additionally, Section 17.17 emphasizes that "time is of the essence" in the agreement, meaning that failure to perform any obligation within the required time frame constitutes a material breach. This provision underscores the importance of adhering to deadlines and timelines specified in the agreement. Section 10.1 also states that the franchisee must maintain the condition and appearance of the franchise according to Healthsource Chiropractic's standards. Failure to do so allows Healthsource Chiropractic to rectify alterations at the franchisee's expense.
These stipulations provide Healthsource Chiropractic with considerable latitude in determining whether a franchisee is meeting their obligations and in taking corrective actions if they are not. For a prospective franchisee, this means understanding and adhering to all requirements outlined in the agreement and the Operations Manual is crucial to avoid potential disruptions and maintain a positive relationship with Healthsource Chiropractic. It also highlights the importance of open communication and proactive problem-solving to address any compliance issues that may arise.