What is the consequence if a Healthsource Chiropractic franchisee makes an assignment for the benefit of creditors?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| a. | Length of the franchise term | Section 6.1 | The term begins on the effective date and ends on the earlier of the date you open the last Clinic you are required to open under your Development Schedule or the expiration of your Development Schedule. |
| b. | Renewal or extension of the term | Not Applicable | Not Applicable |
| c. | Requirements for franchisee to renew or extend | Not Applicable | Not Applicable |
| d. | Termination by franchisee | Not Applicable | Franchisees may terminate the agreements under any grounds permitted by state law. |
| e. | Termination by franchisor without cause | Not Applicable | Not Applicable |
| f. | Termination by franchisor with cause | Section 6.2 | We may terminate your Development Agreement with cause as described in (g)-(h) of this Item 17 Chart. |
| g. | "Cause" defined – curable defaults | Section 6.2 | We may terminate the Development Agreement if you fail to meet your development obligations under the Development Agreement during the Development Period (including any monetary default) and you fail to cure such default within 30 days of receiving notice. |
| h. | "Cause" defined – non-curable defaults | Section 6.2 | We may terminate the Development Agreement if you cease to actively engage in development activities in the Site Selection Area or otherwise abandon your development business for three consecutive months, or any shorter period that indicates an intent |
| Provision | Section in Development Agreement | Summary |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 53–64)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, if a franchisee makes an assignment for the benefit of creditors, it constitutes a non-curable default under the Development Agreement. This means Healthsource Chiropractic has grounds to terminate the Development Agreement.
This provision protects Healthsource Chiropractic from potential financial instability or mismanagement on the part of the developer that could negatively impact the brand's reputation and the fulfillment of development obligations. It allows Healthsource Chiropractic to take swift action if a developer demonstrates an inability to manage their financial obligations.
For a prospective Healthsource Chiropractic developer, this highlights the importance of maintaining financial stability and adhering to the terms of the Development Agreement. It underscores the need for careful financial planning and management to avoid situations that could lead to insolvency or assignment for the benefit of creditors, which could result in the termination of the Development Agreement and loss of the franchise opportunity.