Is prior written consent from Beehive Homes required to pledge or encumber the Franchise?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
13.7. Mortgages and Pledges to Lending Institutions.
- (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.
XIV. DEFAULT AND REMEDIES
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, generally, prior written approval from Beehive Homes is required to pledge or encumber the franchise. However, there is an exception for mortgages and pledges to lending institutions under specific conditions.
Specifically, a franchisee may mortgage or pledge the Home or an Equity Interest to finance acquisition or construction without notifying or obtaining consent from Beehive Homes if the franchisee is the sole borrower, the loan is not secured by any other Home or collateral, and the loan does not provide more than 6 months of operating capital.
However, franchisees must notify Beehive Homes in writing before creating any additional lien or encumbrance beyond what is permitted above, or making a collateral assignment of the Franchise Agreement. Creating such a lien or encumbrance requires prior written approval from Beehive Homes, which may be based on an evaluation of the financing structure and the need for special agreements or assurances, such as a lender comfort letter or loan-related guaranty. Beehive Homes may charge a fee for reviewing the proposed mortgage or pledge and processing a lender comfort letter.
For franchisees assigning their franchise to a corporation, partnership, or limited liability company, prior written consent from Beehive Homes is required to pledge or encumber the franchise. This requirement extends to any further transfer or assignment of the franchise, any assignment, transfer, or pledge of any equity interest in the assignee, the creation of new equity interests in the assignee, and any amendment of the organizational documents relating to the assignee.