Can Healthsource Chiropractic terminate the Development Agreement if a receiver is appointed for the franchisee?
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 with cause if a receiver is appointed for the franchisee.
The FDD outlines specific conditions under which Healthsource Chiropractic can terminate the Development Agreement. One such condition is if a receiver is appointed for the franchisee. This falls under non-curable defaults, meaning the franchisee does not have a period to correct the issue before termination.
This provision protects Healthsource Chiropractic from potential financial or operational instability of the developer. If a receiver is appointed, it indicates significant financial distress, which could negatively impact the development of new Healthsource Chiropractic clinics. Therefore, Healthsource Chiropractic reserves the right to terminate the agreement to mitigate these risks and ensure the continued stability and growth of the franchise system.