What is the credit risk that Petro Stopping Center faces?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
etoff from any amounts that we may owe you any amount that you owe to us, or our Affiliates, for any reason whatsoever, including without limitation, Royalties, Monthly Advertising Fees, and late payment interest, amounts owed to us or our Affiliates for purchases of Products or Services, or for any other reason. Payments that we make to you may be reduced, in our discretion, by amounts that you owe to us or our Affiliates from time to time. In particular, we may retain (or direct to our Affiliates) any amounts that we have received for your account as a credit and payment against any amounts that you may owe to us, or our Affiliates, at any time. We may do so without notice to you at any time. However, you do not have the right to offset payments owed to us for amounts purportedly due to you from us.
9.14 Credit. If you desire to purchase Products or Services from us on credit, you must establish a line of credit with our, or our Affiliate's, credit department. We, in our sole discretion, shall have the right to establish (and modify or change, from time to time) the terms of credit which we offer to you. As a condition to supplying Products or Services to you on credit, we will require that you provide us with certain financial statements on a monthly basis, and we may require additional security from you and/or charge you a fee for such credit. If you fail to fulfill the terms of payment or if your financial condition deteriorates, as determined in our sole discretion, we may, without prejudice to any other lawful remedy, withhold Products and Services until payment is made, demand cash payment, demand advance payment or terminate this Agreement. We may apply any payment made by you or on your behalf to any indebtedness owed to us. No payment made to us by check or other instrument shall contain a restrictive endorsement of any kind. A restrictive endorsement shall have no legal effect, even if the instrument restrictively endorsed is processed for payment and we retain the proceeds. Among other things, we may shorten or change then-existing payment terms for your purchases of Products or Services in order to ensure that such payments are received prior to the expiration or termination of this Agreement.
10. MARKS.
- 10.1 Ownership and Goodwill of Marks and Copyrights. As between you and us, we own or have been licensed by our Affiliates, or otherwise, all rights, title and interest in and to the Marks and all information capable of being rendered into tangible form (i.e., copyrights) created in connection with or used in connection with the Petro System or your Petro Center (collectively, the "Copyrights"). The Copyrights include, for example, written materials, electronic data, software, Manuals, brochures, photography, the content and compilation of websites, graphics, and the like. Your right to use the Marks and the Copyrights is derived solely from this Agreement and limited to your operation of the Petro Center pursuant to and in compliance with this Agreement and all Petro System Standards we prescribe from time to time during the Term. Your unauthorized use of the Marks and the Copyrights will be a breach of this Agreement and an infringement of our rights in and to the Marks and the Copyrights. You acknowledge and agree that your usage of the Marks and the Copyrights and any goodwill established by such use will be exclusively for our benefit and that this Agreement does not confer any goodwill or other interests in the Marks or the Copyrights upon you (other than the right to operate the Petro Center in compliance with this Agreement).
Source: Item 14 — Other investments (FDD pages 131–208)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, Petro Franchise Systems LLC faces credit risks primarily related to franchisees' potential failure to meet their financial obligations. Petro Stopping Center does not commit to extending credit to franchisees. If a franchisee desires to purchase products or services on credit, they must establish a line of credit with Petro Stopping Center's or its affiliate's credit department. Petro Stopping Center retains the right to set, modify, or change the credit terms offered to the franchisee.
As a condition for providing products or services on credit, Petro Stopping Center will require monthly financial statements from the franchisee and may also demand additional security or charge a fee for the credit. If the franchisee fails to meet the payment terms or if their financial condition deteriorates, Petro Stopping Center can withhold products and services until payment is made, demand cash payment, require advance payment, or even terminate the Franchise Agreement. Petro Stopping Center can apply any payment made by the franchisee to any outstanding debt owed to them.
Petro Stopping Center also has the right to transfer funds from the franchisee's bank account for payments of royalties and other amounts due. If the franchisee under-reports gross sales or underpays royalties, Petro Stopping Center is authorized to immediately initiate a transfer from the franchisee's account for the appropriate amount, including interest and late charges. Additionally, any amounts owed to Petro Stopping Center will bear interest automatically at a rate of 18% per year or the highest contract rate permitted by law.
To mitigate risks associated with franchisee payment defaults, Petro Stopping Center retains significant control over payment processes and credit terms, ensuring they can act swiftly to protect their financial interests. These measures are typical in franchising, where franchisors must balance supporting franchisee growth with safeguarding their revenue streams.