Under the Benjamin Franklin Plumbing promissory note, what constitutes an event of default?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Default.
- A. Any of the following events shall constitute an event of default ("Default"):
- (i) Maker fails to pay any principal of or, if applicable, interest on this Note when the same shall become due, either by the terms hereof or by acceleration or otherwise; or
- (ii) Maker or its affiliates or subsidiaries default on any agreement with Holder, or its affiliates or subsidiaries, including the Franchise Agreement.
- B. Upon the occurrence of any Default, Holder may, at its option and in addition to any right, power or remedy permitted by law or equity, by written notice to Maker, declare the unpaid Principal Amount of this Note to be and the same shall thereupon be and become, forthwith due and payable in its entirety, together with, if applicable, accrued interest on that amount. A Default under this Note shall also constitute a Default under the Franchise Agreement. No waiver by Holder of any Default shall operate as a waiver of any other default or the same default on a future occasion.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, a default on the promissory note occurs under specific conditions. The first condition is if the Maker (franchisee) fails to pay the principal or interest on the note when it is due, whether by the original terms, acceleration, or other circumstances.
The second condition for default is if the Maker, its affiliates, or subsidiaries default on any agreement with the Holder (Benjamin Franklin Franchising SPE LLC), its affiliates, or subsidiaries. This includes defaulting on the Franchise Agreement itself.
Upon any default, Benjamin Franklin Franchising SPE LLC has the option to declare the unpaid principal amount of the note immediately due and payable, along with any accrued interest. Importantly, a default on the promissory note also constitutes a default under the Franchise Agreement. The document also states that if Benjamin Franklin Franchising SPE LLC waives a default, it does not waive any other default or the same default in the future.