How does Healthsource Chiropractic apply payments received from franchisees?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
6.7 Application of Payments; No Set-Off. When we receive a payment from you, we have the right in our sole discretion to apply it as we see fit to any past due indebtedness of yours due to us or our affiliates, whether for Continuing Franchise Fees, Advertising Fees, purchases, interest, or for any other reason, regardless of how you may designate a particular payment should be applied. You may not, on grounds of alleged non-performance by HealthSource Chiropractic of its obligations under this Agreement, withhold payment of Continuing Franchise Fees and/or any other amounts due to HealthSource Chiropractic and/or its related parties or affiliates.
- 6.8 Modification of Payments. If, by operation of law or otherwise, any fees contemplated by this Agreement cannot be based upon gross revenues, then you and we agree to negotiate in good faith an alternative fee arrangement. If you and we are unable to reach an agreement on an alternative fee arrangement, then HealthSource Chiropractic reserves the right to terminate this Agreement upon notice to you, in which case all of the post-termination obligations set forth in Section 16 shall apply.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, the franchisor has broad discretion in applying payments received from franchisees. Healthsource Chiropractic can apply payments to any past due indebtedness the franchisee owes to them or their affiliates. This includes Continuing Franchise Fees, Advertising Fees, purchases, or interest, regardless of how the franchisee designates the payment. This policy provides Healthsource Chiropractic with significant flexibility in managing franchisee accounts and ensuring that outstanding debts are addressed promptly.
This application of payments policy has important implications for prospective franchisees. It means that if a franchisee has multiple outstanding obligations to Healthsource Chiropractic, the franchisor can choose which obligation to satisfy first with any payment received. Franchisees cannot withhold payments, such as Continuing Franchise Fees, based on alleged non-performance by Healthsource Chiropractic. This underscores the importance of maintaining open communication with Healthsource Chiropractic and resolving any disputes promptly to avoid falling behind on payments.
In the event that any fees cannot be based on gross revenues due to legal or other restrictions, Healthsource Chiropractic will negotiate an alternative fee arrangement with the franchisee. However, if an agreement cannot be reached, Healthsource Chiropractic reserves the right to terminate the Franchise Agreement. This highlights the potential risk of termination if franchisees are unable to agree on alternative fee arrangements, emphasizing the need for franchisees to understand and comply with the franchisor's payment policies and requirements.