Can a Benjamin Franklin Plumbing franchisee assign the promissory note to another party?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of the willingness of Benjamin Franklin Franchising SPE LLC ("Holder") to permit ("Maker") to pay a portion of the Franchise Fee owed to Holder in connection with a BENJAMIN FRANKLIN PLUMBING Franchise Agreement and pursuant to the foregoing Promissory Note ("Note"), the undersigned ("Guarantors"), hereby personally and unconditionally: (1) guarantee to Holder and its successors and assigns that Maker shall punctually pay and perform each and every undertaking set forth in the Note; and (2) agree personally to be liable for Maker's Default under the Note.
Each Guarantor waives: (a) acceptance and notice of acceptance by Holder of the foregoing undertakings; (b) notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed; (c) protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed; (d) any right he or she may have to require that an action be brought against Maker or any other person as a condition of liability; (e) all rights to payments and claims for reimbursement or subrogation which any Guarantor may have against Maker arising as a result of the execution of and performance under this Guarantee by any Guarantor; (f) any law or statute which requires that Holder make demand upon, assert claims against or collect from Maker or any others, foreclose any security interest, sell collateral, exhaust any remedies or take any other action against Maker or any others prior to making any demand upon, collecting from or taking any action against Guarantors with respect to this Guarantee; (g) any and all other notices and legal or equitable defenses to which he or she may be entitled; and (h) any and all right to have any legal action under this Guarantee decided by a jury.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document does not explicitly state whether a Benjamin Franklin Plumbing franchisee can assign their promissory note to another party. However, the FDD does include information regarding the franchisor's rights as the 'Holder' of the note and the franchisee's obligations as the 'Maker'.
The document outlines a 'Guarantee' where guarantors ensure the franchisee ('Maker') fulfills all obligations under the promissory note. This guarantee extends to Benjamin Franklin Franchising SPE LLC ('Holder') and its successors and assigns, suggesting the franchisor can transfer or assign the note. The franchisee ('Debtor') grants the franchisor ('Secured Party') a security interest in the collateral to secure the franchisee's obligations under the promissory note and Franchise Agreement.
While the FDD details the franchisor's rights and the security interest, it remains silent on the franchisee's ability to assign the note to a third party. A prospective franchisee should seek clarification from Benjamin Franklin Plumbing regarding the possibility of assigning the promissory note. Understanding this aspect is crucial for financial planning and potential exit strategies.