Under what conditions is a Healthsource Chiropractic Licensed Provider deemed to be in default under the agreement?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
12. Default and Termination.
12.1 Licensed Provider will be deemed to be in default under this Agreement, and Management Company will have the right to terminate this Agreement effective upon delivery of notice of termination to Licensed Provider, subject only to any right to cure to the extent expressly set forth below, if:
(a) Licensed Provider assigns or transfers this Agreement, or the ownership of Licensed Provider (if an entity) changes, without the prior written consent of Management Company;
(b) Licensed Provider or, if Licensed Provider is an entity, any of its owners, is adjudged a bankrupt, becomes insolvent or makes a general assignment for the benefit of creditors, or fails to satisfy any judgment rendered against it for a period of 30 days after all appeals have been exhausted;
(c) Licensed Provider uses, sells, distributes, or gives away any services or products, or use any patient referral or marketing service, that has not been formally approved by Management Company in writing and in advance;
(d) Licensed Provider or, if Licensed Provider is an entity, any of its owners, is convicted of or pleads no contest to a felony or are convicted or plead no contest to any crime or offense that is likely to adversely affect the reputation of Management Company, the Clinic Management Business, HealthSource, and/or the goodwill associated with the System or the Marks, or otherwise engages in any dishonest, unethical or other conduct that is reasonably likely to reflect materially and unfavorably on the goodwill or reputation of Management Company, the Clinic Management Business, the System or the Marks;
(e) Licensed Provider (or any of Licensed Provider's employees) violates any health or safety law, ordinance or regulation, or performs the Licensed Provider Services in a manner that presents a health or safety hazard to patients or the public;
(f) Licensed Provider does not pay when due any monies owed to Management Company, including the Management Fee, and does not make such payment within 2 days after written notice is given to Licensed Provider;
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic FDD, a Licensed Provider will be considered in default under the agreement if certain conditions are met. These conditions primarily relate to the Licensed Provider's conduct, financial stability, and adherence to Healthsource Chiropractic's standards and approved practices.
Specifically, default can occur if the Licensed Provider assigns or transfers the agreement without prior written consent from the Management Company, or if there's a change in the ownership of the Licensed Provider entity without consent. Financial instability, such as being adjudged bankrupt, becoming insolvent, making a general assignment for the benefit of creditors, or failing to satisfy a judgment, can also trigger a default.
Furthermore, the Licensed Provider can be in default if they use, sell, distribute, or give away any services or products, or use any patient referral or marketing service, that hasn't been formally approved by the Management Company in writing and in advance. A criminal conviction of the Licensed Provider or any of its owners for a felony or any crime that could adversely affect Healthsource Chiropractic's reputation also constitutes a default. Violations of health or safety laws, or performing services in a manner that presents a health or safety hazard, are additional grounds for default. Finally, failure to pay monies owed to the Management Company, including the Management Fee, within two days of written notice also results in default.
These default conditions are important for a prospective Healthsource Chiropractic franchisee to understand, as they outline the circumstances under which the agreement can be terminated. Franchisees should ensure they fully understand these obligations and have systems in place to comply with them to avoid potential default and termination of their agreement.