What must Bang Cookies franchisee do regarding installment payments from the transferee?

According to Bang Cookies's 2024 Franchise Disclosure Document, a franchisee entering into an agreement with Bang Cookies must agree to subordinate any obligations of the transferee to make installment payments of the purchase price to the franchisee. This subordination is specifically in favor of the transferee's obligations to Bang Cookies. These obligations include, but are not limited to, the transferee's obligations regarding Royalty Fees and Advertising Contributions.

In simpler terms, if a franchisee sells their Bang Cookies franchise and the new owner (transferee) is paying the former franchisee in installments, the former franchisee must agree that Bang Cookies gets paid first. This means that if the new owner is struggling financially, Bang Cookies's Royalty Fees and Advertising Contributions take priority over the installment payments owed to the former franchisee.

This condition protects Bang Cookies by ensuring that ongoing franchise fees are paid, even if the new owner has financial difficulties. However, this arrangement increases the risk for the selling franchisee, as they may not receive the full purchase price if the new owner's business struggles. Prospective franchisees should carefully consider this risk and seek legal and financial advice before agreeing to such terms.