What happens to the Spray Net franchisee's dedicated phone numbers upon termination, expiration, or transfer of the agreement?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
uring this thirty (30) day period. If Franchisor elects to purchase equipment as part of the asset purchase, Franchisor will be entitled to, and Franchisee must provide, all customary warranties and representations as to compliance with law, the maintenance, function, and condition of the equipment and Franchisee's good title to the equipment (including, but not limited to, that Franchisee owns the equipment free and clear of any liens and encumbrances).
- I. Disconnection of Telephone Number on Termination/Renewal. Franchisee acknowledges that there will be substantial confusion among the public if, after the termination or expiration and non-renewal of this Agreement, Franchisee continues to use advertisements and/or the telephone number listed in the telephone directory under the name "SPRAY-NET" or any name similar to it. Thus, effective upon the termination or expiration and non-renewal of this Agreement, Franchisee agrees to direct the telephone company servicing Franchisee, per Franchisor's request, to disconnect the telephone number used in connection with the Franchised Business or transfer such number to Franchisor or to any person or location of Franchisor's choosing. If Franchisee fails to take these steps, Franchisee shall be deemed to have hereby irrevocably appointed Franchisor as Franchisee's attorney-in-fact for purposes of directing and accomplishing such transfer. Franchisee understands and agrees that, notwithstanding any billing arrangements with any telephone company or yellow pages directory company, Franchisor will be deemed for purposes hereof to be the subscriber of such telephone numbers, with full authority to instruct the applicable telephone or yellow pages directory company as to the use and disposition of telephone listings and numbers. Franchisee hereby agrees to release, indemnify, and hold such companies harmless from any damages or loss as a result of following Franchisor's instructions.
- J. Liquidated Damages. Franchisee and Franchisor agree and acknowledge that the damages Franchisor will sustain upon an early termination of this Agreement are difficult to foresee and estimate. Therefore, upon the termination of this Agreement before the end of the Term, Franchisee shall pay Franchisor liquidated damages equal to seven percent (7%) of the applicable annual Minimum Gross Sales for the Franchised Business found in Section 6.Z. of this Agreement corresponding to the year of operation in which this agreement is terminated. For avoidance of doubt, the applicable annual Minimum Gross Sales will be based on the number of Territories Franchisee has purchased and the length of time that Franchisee has operated the Franchised Business. These liquidated damages are in addition to all remedies that Franchisor may have against Franchisee for breach of the restrictive covenants found in Section 14 of this Agreement or extracontractual claims such as fraud or unfair and deceptive trade practices.
- K. Reimbursement for Touch-up Work. If, after the termination or expiration of this Agreement, Franchisor, an affiliate of Franchisor, or another Spray-Net franchisee provides touch-up work for customers to whom Franchisee provided Approved Services, Franchisee shall reimburse Franchisor, Franchisor's affiliate(s), or another Spray-Net franchisee the actual costs of providing such touch-up work upon demand.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to the 2025 Spray Net Franchise Disclosure Document, upon termination or expiration and non-renewal of the Franchise Agreement, the franchisee must disconnect or transfer the phone number used for the franchised business at Spray Net's request. This is to avoid public confusion, as customers might associate the number with Spray Net even after the franchisee is no longer affiliated with the company. If the franchisee fails to do so, Spray Net is irrevocably appointed as the franchisee's attorney-in-fact to direct and accomplish the transfer. Spray Net is deemed the subscriber of the phone numbers with full authority over their use and disposition. The franchisee also agrees to indemnify the phone companies from any losses resulting from following Spray Net's instructions.
Exhibit F of the Franchise Agreement outlines a conditional assignment of telephone numbers and domain names from the franchisee to Spray Net. This assignment becomes effective automatically upon termination or expiration of the franchise. The franchisee is then obligated to take all necessary actions required by the phone company or domain name registrar to ensure the assignment of the assigned property, as if Spray Net had originally been issued such property.
The franchisee is responsible for paying all amounts owed for the use of the assigned property up to the date the assignment becomes effective and must indemnify Spray Net for any sums Spray Net pays to effectuate the agreement. The franchisee also agrees to fully cooperate with the phone company or domain name registrar, as well as Spray Net, in effectuating this assignment. This ensures a smooth transition of phone numbers and domain names back to Spray Net, maintaining brand consistency and preventing misuse of these assets after the franchise relationship ends.