What is the effect of Healthsource Chiropractic terminating the Development Agreement on the developer's rights?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Agreement is terminated because of your default, the rights of HealthSource Chiropractic described above or elsewhere in this Agreement may not necessarily be HealthSource Chiropractic's exclusive remedies but will instead supplement any other equitable or legal remedies available to HealthSource Chiropractic, including the right to withhold performance as provided in Section 15.4 of this Agreement. If this Agreement is terminated because of your default, nothing in this Section 16.5 may be construed to deprive HealthSource Chiropractic of the right to recover damages as compensation for lost profits.
16.6 Continuing Obligations. All obligations of this Agreement (whether yours or ours) that expressly or by their nature survive the expiration or termination of this Agreement will continue in full force and effect after and notwithstanding its expiration or termination until they are satisfied in full or by their nature expire. Without limiting the foregoing, you acknowledge and agree that your covenants in Article 9 above survive the termination or expiration of this Agreement to the extent set forth in such Article 9.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
Based on the 2025 Healthsource Chiropractic Franchise Disclosure Document, if the Development Agreement is terminated due to the developer's default, Healthsource Chiropractic retains all rights described in the agreement and can pursue any available legal or equitable remedies. This includes the right to withhold performance as outlined in Section 15.4 of the agreement and the right to recover damages for lost profits. The termination does not limit Healthsource Chiropractic's ability to seek compensation for financial losses resulting from the developer's breach.
Moreover, all obligations within the Development Agreement that are meant to survive termination will remain in effect. This includes covenants related to confidential information and non-competition as detailed in Article 9 of the agreement. These obligations continue until they are fully satisfied or naturally expire, ensuring that certain responsibilities and restrictions remain even after the agreement ends.
In practical terms, a Healthsource Chiropractic developer facing termination for default could lose their development rights and face legal action from Healthsource Chiropractic to recover lost profits. They would also remain bound by confidentiality and non-competition clauses, preventing them from using proprietary information or competing with Healthsource Chiropractic, even after the agreement is terminated. This highlights the importance of adhering to the terms of the Development Agreement to avoid potential legal and financial repercussions.