Can Healthsource Chiropractic terminate the Development Agreement without cause?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| e. | Termination by franchisor without cause | Not Applicable | Not Applicable |
| f. | Termination by franchisor with cause | Section 6.2 | We may terminate your Development Agreement with cause as described in (g)-(h) of this Item 17 Chart. |
| g. | "Cause" defined – curable defaults | Section 6.2 | We may terminate the Development Agreement if you fail to meet your development obligations under 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 |
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, the franchisor cannot terminate the Development Agreement without cause. The table in Item 17 outlines the conditions under which Healthsource Chiropractic can terminate the Development Agreement with cause, as detailed in sections 6.2(g) and 6.2(h) of the Development Agreement.
Healthsource Chiropractic may terminate the Development Agreement if the developer fails to meet their development obligations, including monetary defaults, during the Development Period, and fails to correct the issue within 30 days of receiving notice. Additionally, Healthsource Chiropractic can terminate the agreement if the developer ceases active engagement in development activities within the Site Selection Area, abandons their development business for three consecutive months (or a shorter period indicating intent to discontinue development), becomes insolvent or bankrupt, makes an assignment for the benefit of creditors, or if any related Franchise Agreement is terminated.
This means that a Healthsource Chiropractic developer is protected from arbitrary termination, provided they adhere to the terms of the Development Agreement and fulfill their obligations. However, failure to meet development schedules, financial obligations, or indications of abandoning the development business can lead to termination. It is important for prospective developers to understand these conditions and ensure they have the resources and commitment to meet the requirements of the Development Agreement.
It is also important to note that the Development Agreement outlines specific procedures for termination, including notice and cure periods for certain defaults. Developers should carefully review these provisions to understand their rights and obligations in the event of a potential termination. Understanding these terms is crucial for any prospective Healthsource Chiropractic developer to mitigate risks and ensure a successful business relationship with the franchisor.