When Healthsource Chiropractic receives a payment from a franchisee, does Healthsource Chiropractic have discretion in how to apply the payment?
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.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, Healthsource Chiropractic has the right to apply payments from franchisees to outstanding debts as it sees fit. Specifically, Healthsource Chiropractic can apply payments to past due indebtedness, regardless of how the franchisee designates the payment. This indebtedness can include Continuing Franchise Fees, Advertising Fees, purchases, or interest.
This means that if a Healthsource Chiropractic franchisee has multiple outstanding obligations to the franchisor or its affiliates, Healthsource Chiropractic has the authority to decide which debt the payment will cover. This is irrespective of any specific instructions the franchisee might provide when making the payment.
This discretion benefits Healthsource Chiropractic, as it allows them to prioritize the collection of certain types of debt or to address older outstanding balances. However, this policy could pose a risk to franchisees, especially those who may want to ensure that their payments are applied to specific obligations. Franchisees do not have the right to withhold payments based on alleged non-performance by Healthsource Chiropractic.