Does Healthsource Chiropractic reserve the right to impose conditions on the transfer of interest by a Principal Owner?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
ance written approval for the Transfer must be obtained. In the event of any minority owner transfer, you will promptly notify us of the change in ownership or Interests. Your formal partnership,
corporation or other formation documents and all stock certificates, partnership units or other evidence of ownership must recite or bear a legend reflecting the transfer restrictions of this Paragraph 14.4.
e. If you propose to Transfer this Agreement, the Franchise or its assets, or any Interest, or if any of your Principal Owners proposes to Transfer a controlling Interest in you or make a Transfer that is one of a series of Transfers which taken together would constitute the Transfer of a controlling Interest in you, then you must apply to us for approval of such Transfer sign such forms and procedures as we have in effect at that time, the person or entity to whom you wish to make the Transfer ("Proposed New Owner") must apply to us for acceptance as a franchisee, and you must submit to us all of the information and documentation required for us to evaluate the proposed Transfer and to confirm that all of the conditions set forth in Section 14.5 below have been, or will be, satisfied.
14.5 Conditions for Approval of Transfer. If you and your Principal Owners are in full compliance with this Agreement, both monetary and otherwise, we will not unreasonably withhold our approval of a Transfer that meets all the applicable requirements of this Section 14. The Proposed New Owner must be of good moral character and otherwise meet our then applicable standards for HealthSource Chiropractic Clinic franchisees. For any proposed Transfer, all of the following conditions must be met before or at the time of the Transfer:
a. in our belief and judgment, the Proposed New Owner must have sufficient business experience, aptitude, and financial resources to operate the Franchise;
b. you must pay any amounts owed for purchases from us and our affiliates, and any other amounts owed to us or our affiliates which are unpaid, including any Initial Franchisee Fee, Continuing Franchise Fees, and Advertising Fees;
c. the Proposed New Owner's directors and such other personnel as we may designate must have successfully completed our Initial Training program and shall be legally authorized and have all licenses necessary to perform the services offered by the Franchise. The Proposed New Owner shall be responsible for any wages and compensation owed to, and the travel and living expenses (if the Initial Training program is not held virtually in the future, and including all transportation costs, room, board and meals) incurred by, the attendees who attend the Initial Training program;
d. if your lease for the Premises requires it, the lessor must have consented to the assignment of the lease of the Premises to the Proposed New Owner;
e. you must pay us a non-refundable Transfer fee in the amount of $10,000.00 concurrently with the execution of the Transfer Agreement, described in Section 14.5f below, and you must reimburse us for any reasonable expenses incurred by us in investigating and processing any Proposed New Owner where the Transfer is not consummated for any reason;
f. you and your Principal Owners must execute a Transfer Agreement, which will include (i) a general release (in a form satisfactory to us) of any and all claims you and/or they may have against us, our affiliates, and our and our affiliates' respective officers, directors, employees, and agents, and (ii) acknowledgment that the restrictive covenants set forth in Article 9 of this Agreement will survive the Transfer to the extent set forth therein;
g. we must approve the material terms and conditions of the proposed Transfer, including without limitation that the price and terms of payment are not so burdensome as to adversely affect the operation of the Franchise;
h. the Franchise and the Premises shall have been placed in an attractive, neat and sanitary condition.
i.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, Healthsource Chiropractic does place conditions on the transfer of interest by a Principal Owner. Specifically, if a Principal Owner proposes to transfer a controlling interest, they must apply to Healthsource Chiropractic for approval. This involves signing required forms and procedures, and ensuring the proposed new owner also applies for acceptance as a franchisee. All necessary information and documentation must be submitted to allow Healthsource Chiropractic to evaluate the proposed transfer and confirm that all conditions are met.
Healthsource Chiropractic states that they will not unreasonably withhold approval of a transfer if the franchisee and Principal Owners are in full compliance with the agreement. The proposed new owner must be of good moral character and meet Healthsource Chiropractic's standards for franchisees. Several conditions must be met before or at the time of the transfer, including the new owner having sufficient business experience, aptitude, and financial resources.
Additionally, all outstanding payments to Healthsource Chiropractic and its affiliates must be settled. The proposed new owner's directors and designated personnel must successfully complete the initial training program and hold all necessary licenses to perform the services offered by the franchise. A non-refundable transfer fee of $10,000.00 is due upon execution of the transfer agreement, and all reasonable expenses incurred by Healthsource Chiropractic in investigating and processing the proposed new owner must be reimbursed, even if the transfer is not completed. The transfer agreement must include a general release of claims against Healthsource Chiropractic and confirmation that restrictive covenants will survive the transfer. Healthsource Chiropractic must also approve the material terms of the transfer, ensuring the price and payment terms do not negatively impact the franchise operation.
The franchise and premises must be in excellent condition, and the lessor must consent to the lease assignment if required. Agreements must be in place to subordinate installment payments to obligations under the Franchise Agreement and include a general release of claims. The franchise must contain all equipment and fixtures in good working condition, as required at the initial opening. The proposed new owner must agree to make reasonable capital expenditures to remodel and modernize the premises according to Healthsource Chiropractic's specifications and cover expenses for plan preparation, review, and site inspection.