What is the franchisee's (or estate's) obligation regarding costs and liabilities incurred by Spray Net when operating the franchised business on their behalf?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, the franchisee (or their estate) has specific obligations regarding costs and liabilities incurred by Spray Net when operating the franchised business on their behalf. In the event of the franchisee's death, disability, or absence, Spray Net has the option, but not the requirement, to operate the franchised business. If Spray Net chooses to do so, it will be at the franchisee's expense. This includes using the assets and revenues of the business to cover past, current, and future obligations, including amounts owed to Spray Net or its affiliates. Spray Net has the sole discretion to determine the priority of these payments.
Spray Net is also entitled to reimbursement for its management services and other related costs. To formalize these arrangements, Spray Net may seek court or arbitrator approval, with the associated legal fees and costs charged against the business's assets or revenues. Importantly, the franchisee (or their estate) must indemnify Spray Net against any costs or liabilities that Spray Net incurs while operating the franchised business.
This arrangement means that a Spray Net franchisee's estate could be responsible for covering any debts or liabilities accumulated if Spray Net steps in to manage the business temporarily. It is crucial for prospective franchisees to understand that this indemnity extends to any costs Spray Net incurs, highlighting the importance of having a solid business plan and adequate insurance coverage. Franchisees should consult with legal and financial advisors to fully understand the implications of this clause and how it might affect their estate planning.