Is the Atwell Suites Equipment Lessee allowed to transfer or encumber the dispensing equipment?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- TITLE TO THE EQUIPMENT. Title to the Equipment is, and will at all times remain, vested in Company. Equipment Lessee will have no right, title, or interest in or to the Equipment, except the right to quiet use of the Equipment in the ordinary course of its business as provided in this Lease. Equipment Lessee will execute such title documents, financing statements, fixture filings, certificates and such other instruments and documents as Company will reasonably request to ensure to Company's satisfaction the protection of Company's title to the Equipment and Company's interests and benefits under this Lease. Equipment Lessee will not transfer, pledge, lease, sell, hypothecate, mortgage, assign or in any other way encumber or dispose of any of the Equipment. THE PARTIES AGREE. AND EQUIPMENT LESSEE WARRANTS, THAT THE EQUIPMENT IS, AND WILL AT ALL TIMES REMAIN, PERSONAL PROPERTY OF COMPANY NOTWITHSTANDING THAT THE EQUIPMENT OR ANY PART THEREOF MAY NOW BE, OR HEREAFTER BECOME, IN ANY MANNER AFFIXED OR ATTACHED TO, OR EMBEDDED IN, OR PERMANENTLY RESTING UPON, REAL PROPERTY OR IMPROVEMENTS ON REAL PROPERTY. Equipment Lessee will not make any alterations, additions, or improvements to the Equipment without the prior written consent of Company. All parts added to the Equipment through alterations, repairs, additions or improvements will constitute accessions to, and will be considered an item of the Equipment and title to such will immediately vest in Company. Equipment Lessee agrees that Company may transfer or assign all or any part of Company's right, title and interest in or to any Equipment (in whole or in part) and this Lease, and any amounts due or to become due, to any third party ("Assignee") for any reason. Upon receipt of written notice from Company of such assignment, Equipment Lessee will perform all its obligations with respect to any such Equipment or the benefit of the applicable Assignee and, if so di
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites's 2025 Franchise Disclosure Document, the Equipment Lessee is explicitly prohibited from transferring or encumbering the dispensing equipment. The document states that the title to the equipment remains with the Company at all times, and the Equipment Lessee only has the right to use the equipment in the ordinary course of their business.
This restriction means that an Atwell Suites franchisee cannot sell, lease, pledge, mortgage, assign, or otherwise encumber the beverage dispensing equipment provided to them. This is because Atwell Suites retains full ownership and control over the equipment. The Equipment Lessee must also execute any documents reasonably requested by Atwell Suites to protect the company's title and interests in the equipment.
This provision protects Atwell Suites's investment in the dispensing equipment and ensures that the equipment is used only for its intended purpose, which is to dispense Coca-Cola products. It also prevents franchisees from using the equipment as collateral for loans or other financial obligations. Any alterations or additions to the equipment become the property of Atwell Suites, further reinforcing their ownership rights.
If an Atwell Suites franchisee violates this prohibition, they may be liable for liquidated damages, including past-due lease payments, accelerated future lease payments, the value of Atwell Suites's residual interest in the equipment, tax indemnities, and any costs or attorney's fees incurred by Atwell Suites. This underscores the importance of adhering to the terms of the lease agreement and respecting Atwell Suites's ownership of the equipment.