Is a pledge of the Franchise permitted without prior written consent from Beehive Homes?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Franchisee may mortgage or pledge the Home or an Equity Interest therein to a lender to finance the acquisition or construction of the Home, without notifying Franchisor or obtaining its consent, provided that: (i) Franchisee or the applicable Equity Owner is the sole borrower; (ii) the loan is not secured by any other Home or other collateral; and (iii) the loan does not provide more than 6 months of operating capital.
- (b) Franchisee and/or its Equity Owner(s) must notify Franchisor, in writing, before creating any additional lien or encumbrance, beyond that permitted under Section 13.7(a), on the Home or an Equity Interest therein, or making a collateral assignment of this Agreement and shall not create such lien or encumbrance without the prior written approval of Franchisor. Such approval may be based upon, among other factors, Franchisor's evaluation of the structure of the financing to determine which, if any, special agreements and/or assurances for the lender, the Franchisee and/or its Equity Owner(s) will be required of Franchisor, including a "lender comfort letter" or a loan related guaranty, in a form satisfactory to Franchisor. Franchisor may charge a fee for its review of a proposed mortgage or pledge and for the processing of a lender comfort letter.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, generally, a franchisee cannot pledge or encumber the franchise without prior written consent from Beehive Homes. However, there is an exception for mortgages and pledges to lending institutions under specific conditions.
Specifically, a Beehive Homes franchisee may mortgage or pledge the Home or an Equity Interest therein to a lender to finance the acquisition or construction of the Home without notifying Beehive Homes or obtaining its consent if (i) the franchisee or the applicable Equity Owner is the sole borrower, (ii) the loan is not secured by any other Home or other collateral, and (iii) the loan does not provide more than 6 months of operating capital. For any additional lien or encumbrance beyond this, or making a collateral assignment of the Franchise Agreement, the franchisee must notify Beehive Homes in writing and obtain prior written approval. Beehive Homes' approval may depend on their evaluation of the financing structure and may require special agreements or assurances from the lender, franchisee, or equity owners, including a "lender comfort letter" or a loan-related guaranty.
Beehive Homes may charge a fee for reviewing a proposed mortgage or pledge and for processing a lender comfort letter. This policy ensures that Beehive Homes maintains control over the financial obligations and potential risks associated with its franchises, while still allowing franchisees some flexibility in securing financing for their business.