Does Healthsource Chiropractic have the right to audit a franchisee's business records?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
ource Chiropractic's failure to exercise its right to terminate this Agreement will in no way constitute a waiver of its subsequent right to terminate this Agreement for the specified default or for any other default or to exercise any other remedies available to us under this Agreement, at law, or in equity.
16. RIGHTS AND OBLIGATIONS OF COMPANY AND FRANCHISE OWNER UPON TERMINATION OR EXPIRATION OF THE FRANCHISE.
16.1 Payment of Amounts Owed to HealthSource Chiropractic. You agree to pay us within five (5) days after the effective date of termination or expiration of the Franchise, or any later date that the amounts due to us are determined, all amounts owed to us or our affiliates which are then unpaid including, without limitation, any unpaid Initial Franchise Fee, any unpaid
Continuing Franchise Fees, and any termination fee, damages, costs or expenses owed by you pursuant to Section 15.3, together with any audit costs and expenses owed by you pursuant to Section 13.2.
- 16.2 Marks. Use of the Marks and Copyrightable Works after the termination or expiration of the Clinic Franchise will constitute the unlawful use of our intellectual property rights, which include trademarks and service marks.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, Healthsource Chiropractic has specific rights regarding audits and financial obligations upon termination or expiration of the franchise agreement. Specifically, if the franchise agreement is terminated, the franchisee is obligated to pay all outstanding amounts to Healthsource Chiropractic, which includes any unpaid initial franchise fees, continuing franchise fees, termination fees, damages, costs, or expenses owed as per Section 15.3 of the agreement. This also extends to any audit costs and expenses as outlined in Section 13.2.
Furthermore, upon termination of the agreement, the franchisee must provide Healthsource Chiropractic with a final accounting of the franchised business. The franchisee is then required to maintain all accounts and records related to the business for a minimum of seven years after the final payment of any amounts owed to Healthsource Chiropractic, its affiliates, or related persons. However, the franchisee is restricted from selling, disclosing, or transferring any information from these accounts and records to any competitive business, with the exception of patient records needed for their continuing care.
These stipulations ensure that Healthsource Chiropractic can recover any outstanding debts and maintain financial transparency even after a franchise agreement ends. The seven-year record-keeping requirement allows Healthsource Chiropractic to conduct audits or legal proceedings if necessary, while protecting sensitive business information from falling into the hands of competitors. Prospective franchisees should be aware of these obligations and ensure they maintain accurate and complete financial records throughout the term of their franchise agreement.