Is pledging the All County agreement as security considered an assignment?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.3.6. pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon the Business or your transfer, surrender or loss of possession, control or management of the Business; or
Source: Item 23 — Receipts (FDD pages 43–157)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, pledging the franchise agreement as security is considered an assignment. Specifically, Item 20.3.6 states that an assignment, transfer, sale, gift, or other disposition includes the pledge of the agreement to someone other than All County. This also includes pledging an ownership interest in the franchisee as security.
This means that if a franchisee uses the All County franchise agreement as collateral for a loan or other financial obligation, it is treated as a transfer of the franchise. This has significant implications because, according to Item 20.2, the franchisee needs prior written approval from All County to assign or transfer any interest in the business. Failure to obtain this approval constitutes a breach of the agreement and renders the transfer void.
All County's requirement for approval of such pledges protects its interests by ensuring that any party gaining control of the franchise meets their standards. This is a common provision in franchise agreements, as franchisors want to maintain control over who operates their branded businesses. A prospective franchisee should carefully consider this restriction and discuss with All County the conditions under which such a pledge might be approved.