Can Healthsource Chiropractic terminate the Development Agreement if the franchisee becomes insolvent?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
the Development Agreement during the Development Period (including any monetary default) and you fail to cure such default within 30 days of receiving notice. | | h. | "Cause" defined – non-curable defaults | Section 6.2 | We may terminate the Development Agreement if you cease to actively engage in development activities in the Site Selection Area or otherwise abandon your development business for three consecutive months, or any shorter period that indicates an intent | | | Provision | Section in Development Agreement | Summary | |----|---------------------------------------------------------------------------------|----------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | by you to discontinue development of the Clinics within the Site Selection Area; you become insolvent or are adjudicated bankrupt, or if any action is taken by you, or by others against the you, under any insolvency, bankruptcy or reorganization act, or if you make an assignment for the benefit or creditors or a receiver is appointed by you; and any Franchise Agreement that is entered into in order to fulfill your development obligations under the Development Agreement is terminated or subject to termination by us, pursuant to the terms of that Franchise Agreement. | | i.
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, Healthsource Chiropractic can terminate the Development Agreement if the franchisee becomes insolvent.
Specifically, Healthsource Chiropractic may terminate the Development Agreement if the franchisee becomes insolvent or is adjudicated bankrupt. This also applies if any action is taken by the franchisee, or by others against the franchisee, under any insolvency, bankruptcy, or reorganization act. Furthermore, Healthsource Chiropractic can terminate the agreement if the franchisee makes an assignment for the benefit of creditors or a receiver is appointed by the franchisee.
This clause protects Healthsource Chiropractic from potential financial losses and instability that could arise if a developer becomes unable to meet their financial obligations. It is a fairly standard practice in franchising to include such provisions, as the financial health of a developer can directly impact their ability to fulfill the development schedule and maintain the brand's reputation. Prospective Healthsource Chiropractic developers should carefully consider their financial stability and ability to manage their obligations under the Development Agreement to avoid potential termination.