What specific covenants must a Healthsource Chiropractic franchisee comply with upon termination or non-renewal, as outlined in Section 9 of the Franchise Agreement?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| hereunder in any respect, then all | ||
| rights granted to you under the | ||
| Franchise | ||
| Agreement | ||
| shall | ||
| immediately | ||
| and | ||
| automatically | ||
| terminate and revert to us without | ||
| further notice to you or action on our | ||
| part. | ||
| Also, | ||
| in the event, in the opinion of | ||
| our legal counsel, any provision of the | ||
| Franchise Agreement is contrary to | ||
| law and we are not able to negotiate | ||
| an | ||
| amendment | ||
| to | ||
| the | ||
| Franchise | ||
| Agreement | ||
| to | ||
| conform | ||
| to | ||
| legal | ||
| requirements upon 30 days' notice, or | ||
| the | ||
| amendment | ||
| requires | ||
| a | ||
| fundamental change to the Franchise | ||
| Agreement, we may terminate the | ||
| Franchise Agreement. | ||
| i. Your obligations on termination/ non-renewal | Section 16 | You must pay all amounts owed to us; refrain from using our Marks, return to us or destroy (as we specify) all customer lists, forms and materials bearing our Marks or relating to the franchise; de-identify the franchise premises; return the Operations Manual; comply with covenants against competition and the non solicitation, non-disparagement, and non-disclosure covenants in Section 9 of the Franchise Agreement; and cease using all confidential information. |
| You irrevocably appoint us your | ||
| attorney-in-fact- to de-identify your | ||
| franchise premises and enforce your | ||
| requirement to discontinue use of the | ||
| Marks if you do not perform these | ||
| obligations within 10 days of the | ||
| termination of your Agreement. | ||
| You | ||
| must | ||
| also | ||
| (1) | ||
| execute | ||
| any | ||
| documents | ||
| and | ||
| take | ||
| any | ||
| steps | ||
| necessary to delete your listings from | ||
| classified | ||
| telephone | ||
| directories, | ||
| disconnect, or, at our option, assign to | ||
| us all telephone numbers that have |
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, Item 17 outlines the franchisee's obligations upon termination or non-renewal of the franchise agreement. Specifically, franchisees must adhere to the covenants against competition, non-solicitation, non-disparagement, and non-disclosure as detailed in Section 9 of the Franchise Agreement. This means that after the franchise agreement ends, the franchisee is still bound by certain restrictions to protect Healthsource Chiropractic's interests.
These obligations include refraining from engaging in competitive activities, soliciting Healthsource Chiropractic's employees or customers, making disparaging remarks about the brand, and disclosing confidential information. Franchisees must also cease using all confidential information. These post-termination covenants are common in franchising to prevent former franchisees from using the franchisor's proprietary information and business practices to compete against the system.
In addition to complying with these covenants, franchisees must also pay all outstanding amounts owed to Healthsource Chiropractic. They are required to stop using Healthsource Chiropractic's trademarks, and return or destroy all customer lists, forms, and materials bearing the company's marks or relating to the franchise, as specified by Healthsource Chiropractic. The franchisee must also de-identify the franchise premises and return the Operations Manual.
Furthermore, Healthsource Chiropractic has the power of attorney to de-identify the franchise premises and enforce the discontinuation of the use of their marks if the franchisee fails to fulfill these obligations within 10 days of termination. Franchisees are also required to execute documents and take necessary steps to delete their listings from classified telephone directories and disconnect or assign all telephone numbers to Healthsource Chiropractic.