What are the possible requirements Bens Soft Pretzels may impose when a franchisee grants a security interest?
Bens_Soft_Pretzels Franchise · 2025 FDDAnswer from 2025 FDD Document
In the case of an installment sale for which we have consented to you or any Owner retaining a security interest or other financial interest in this Agreement or the business operated thereunder, you or such Owner, and the guarantors, are obligated to guarantee the performance under this Agreement until the final close of the installment sale or the termination of such interest, as the case may be.
Source: Item 22 — CONTRACTS (FDD pages 46–47)
What This Means (2025 FDD)
According to Bens Soft Pretzels' 2025 Franchise Disclosure Document, if a franchisee or any owner retains a security interest or other financial interest in the Franchise Agreement or the business operated under it due to an installment sale, they and the guarantors must guarantee performance under the Franchise Agreement. This obligation lasts until the final close of the installment sale or the termination of the interest.
This condition ensures that even if a franchisee sells their business in installments and retains a financial stake, they remain responsible for upholding the terms of the Franchise Agreement. This protects Bens Soft Pretzels by ensuring continued compliance and performance even during a transfer of ownership.
This requirement is fairly standard in franchising. Franchisors want to ensure a smooth transition and continued adherence to brand standards, and holding the original franchisee accountable during the installment period helps achieve this. Prospective franchisees should carefully consider this obligation when planning to sell their business, as it could extend their responsibilities beyond the initial sale.