Does Mr. Sandless have the right to apply payments at their discretion, regardless of the designated purpose?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
We shall keep in a separate account all monies generated by the operation of your Business, less the expenses of the Business, including reasonable compensation and expenses for our representatives. In the event of our exercise of the Step-In Rights**,** you agree to hold harmless us and our representatives for all actions occurring during the course of such temporary operation. You agree to pay all of our reasonable attorneys' fees and costs incurred as a consequence of our exercise of the Step-In Rights. Nothing contained herein shall prevent us from exercising any other right which we may have under this Agreement, including, without limitation, termination.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
Based on the 2025 Mr. Sandless Franchise Disclosure Document, there is no explicit clause stating that Mr. Sandless has the right to apply payments at their discretion, regardless of the designated purpose. The document outlines various fees and payments required from the franchisee, such as the additional territory fee of $5,000.00 for each additional territory purchased, and fines of $500 per occurrence for unapproved marketing.
However, the FDD does not specify whether Mr. Sandless can redirect payments made for one purpose to another. The agreement does mention that Mr. Sandless keeps monies generated by the operation of the franchisee's business in a separate account, less the expenses of the business, including reasonable compensation and expenses for their representatives, in the event of exercising their Step-In Rights. This suggests some level of control over the franchisee's funds under specific circumstances.
Without a clear statement regarding the franchisor's ability to reallocate payments, prospective franchisees should seek clarification from Mr. Sandless regarding their policies on payment allocation and whether they reserve the right to apply payments to outstanding debts or other obligations at their discretion. Understanding these policies is crucial for managing finances and maintaining a clear financial relationship with the franchisor.