Under what financial conditions, such as being adjudged bankrupt or becoming insolvent, can the Healthsource Chiropractic franchise agreement be terminated?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
| 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. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 53–64)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, the Development Agreement can be terminated by Healthsource Chiropractic if the developer becomes insolvent or is adjudicated bankrupt. Termination can also occur if any action is taken by the developer, or by others against the developer, under any insolvency, bankruptcy, or reorganization act. Additionally, if the developer makes an assignment for the benefit of creditors or a receiver is appointed, Healthsource Chiropractic has grounds for termination.
This means that if a Healthsource Chiropractic developer faces severe financial distress leading to insolvency, bankruptcy, or similar formal financial proceedings, Healthsource Chiropractic has the right to terminate the Development Agreement. This provision protects Healthsource Chiropractic from potential negative impacts associated with a financially unstable developer, such as inability to fulfill development obligations or damage to the brand's reputation.
It is important to note that this termination clause applies specifically to the Development Agreement, which governs the developer's obligations to open multiple Healthsource Chiropractic clinics within a specified area. The FDD mentions that any Franchise Agreement entered into to fulfill development obligations, if terminated or subject to termination by Healthsource Chiropractic, also constitutes grounds for terminating the Development Agreement. A prospective franchisee should carefully review the definitions of "insolvent" and "bankrupt" within the Development Agreement and consult with a financial advisor to understand the full implications of this clause.