What is the extent of Spray Net's discretion in determining the terms and conditions under which it operates a franchised business on behalf of a deceased or disabled franchisee?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
ccept the conditions imposed by the Franchise Agreement and are acceptable to Franchisor.
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- Franchisor is under no obligation to operate the Franchised Business, or incur any obligation on behalf of any incapacitated franchisee, during or after the 180 Day Period. If necessary, Franchisee (or Franchisee's legal representative, as applicable) shall appoint a previously approved acting interim manager to operate the Franchised Business during the 180 Day Period. In the event of Franchisee's death, disability, absence or otherwise, Franchisor may (but is not required to) operate the Franchised Business on Franchisee's behalf and at Franchisee's expense for such period of time (and under such terms and conditions) as Franchisor determines, including paying out the assets and/or revenues of the Franchised Business to cover any or all past, current and/or future obligations of the Franchised Business (including any amounts owed to Franchisor and/or any affiliate) in such priorities as Franchisor determines in Franchisor's sole discretion. Franchisor may pay itself a reasonable amount to reimburse Franchisor for Franchisor's management services and other costs. Franchisor may obtain approval of a court or arbitrator for any such arrangements, the attorney's fees and other costs incurred in connection with obtaining such approval to be charged against the assets and/or revenues of the Franchised Business. Franchisee (and/or Franchisee's estate) will indemnify Franchisor against any costs and/or liabilities incurred by it in connection with, or related in any way to, the operation (or otherwise) of the Franchised Business.
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Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, in the event of a franchisee's death, disability, absence, or other incapacitation, Spray Net has the option, but not the obligation, to operate the franchised business on the franchisee's behalf. This operation would be at the franchisee's expense and for a duration determined by Spray Net.
Spray Net's discretion extends to determining the terms and conditions under which it operates the business during this period. This includes using the assets and/or revenues of the franchised business to cover past, current, and future obligations, with the priority of payments determined solely by Spray Net. Spray Net can also pay itself a reasonable amount to cover management services and other related costs.
Spray Net may seek court or arbitrator approval for these arrangements, with the legal fees and costs associated with obtaining such approval charged against the assets and/or revenues of the franchised business. The franchisee (or their estate) is required to indemnify Spray Net against any costs or liabilities incurred in connection with the operation of the franchised business. However, Spray Net is under no obligation to operate the franchised business or incur any obligations on behalf of an incapacitated franchisee beyond a 180-day period. If necessary, the franchisee (or their legal representative) must appoint a previously approved acting interim manager to operate the business during this 180-day period.