Under what conditions will a Healthsource Chiropractic franchisee be required to reimburse Healthsource Chiropractic for the cost of an inspection or audit?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, a franchisee is obligated to cover audit costs and expenses if they owe Healthsource Chiropractic money upon termination or expiration of their franchise agreement. This obligation extends to any unpaid amounts, including the Initial Franchise Fee, Continuing Franchise Fees, termination fees, damages, costs, or expenses as outlined in Section 15.3 of the agreement.
This means that if a Healthsource Chiropractic franchisee's agreement ends, and they have outstanding debts to the company, they will also be responsible for the expenses associated with auditing their records to determine the exact amount owed. This could include fees for the auditors, legal costs, and other related expenses incurred by Healthsource Chiropractic during the audit process.
For a prospective franchisee, this highlights the importance of maintaining accurate financial records and fulfilling all payment obligations throughout the term of the franchise agreement. Failure to do so could result in additional financial burdens in the event of termination or expiration, as they would not only be responsible for the original debt but also the costs of auditing to determine that debt. This is a fairly standard clause in franchise agreements, intended to protect the franchisor from incurring additional losses when a franchisee fails to meet their financial obligations.