Does Management Recruiters have an obligation to extend financing to any individual franchisee?

According to Management Recruiters' 2024 Franchise Disclosure Document, Management Recruiters is not obligated to extend financing to any individual franchisee. However, an affiliate, HQ Financial Corporation, does offer limited financing to qualified franchisees for their franchise business. Management Recruiters reserves the right to approve or deny any requests for credit at their discretion and providing credit does not create an obligation to provide additional credit under any arrangement, nor does Management Recruiters guarantee any franchisee's note, lease, or obligation.

To be eligible for a loan from HQ Financial Corporation, a prospective Management Recruiters franchisee must submit an application to the Legal Department with financial statements. They must also have no outstanding obligations to Management Recruiters older than 30 days (except for debt in good standing that may be refinanced), have a satisfactory credit rating, agree to extend their Franchise Agreement term if necessary to cover the loan repayment, meet Management Recruiters' current operating standards, and be of better than average qualifications.

If a Management Recruiters franchisee defaults on their loan, the interest rate on the unpaid principal balance will increase to 18% per annum (not to exceed the maximum legal rate). Management Recruiters can declare the entire indebtedness immediately due and payable if any installment is not paid within 30 days of the due date. A default under the Loan Documents does not automatically constitute a default under the Franchise Agreement. However, the collateral pledged for the loan includes franchise rights and agreements with Management Recruiters, so a loan default may lead to the loss of the franchise.