Does the Bevaris Alliance franchise agreement allow the franchisor to mortgage their rights?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
he prior written consent of the Franchisor (such consent not to be unreasonably conditioned, withheld or delayed), assign, transfer, mortgage, charge, declare a trust of, sub-contract, delegate or deal in any other manner with:
- (a) this agreement or any of their rights and obligations under it (or any document referred to in it); or
- (b) the Franchisee's Business, or purport to do any of the same.
- 23.2 The Franchisor may, at any time, assign (absolutely or by way of security and in whole or in part), transfer, mortgage, charge or deal in any other manner with the benefit of any or all of any other party's obligations or any benefit arising under this agreement.
- 23.3 If there is an assignment pursuant to clause 23.2:
- (a) the Franchisee and Individual shall discharge their obligations under this agreement to the Franchisor until they receive written notice of the assignment;
- (b) the assignee may enforce this agreement as if it were a party to it, but the Franchisor shall remain liable for its obligations under this agreement;
- (c) the liability of the Franchisee and Individual to any assignee cannot be greater than their liability to the Franchisor;
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, the franchisor has the right to mortgage their rights under the franchise agreement. Specifically, Bevaris Alliance can assign, transfer, mortgage, charge, or deal in any manner with the benefits of the obligations or benefits arising from the agreement.
This means Bevaris Alliance has broad latitude to leverage the financial benefits of the franchise agreements. For a franchisee, this implies that the entity they are contracted with could change, or the revenue stream from their franchise could be used as collateral for the franchisor's debts.
However, the FDD also states that if such an assignment occurs, the franchisee must continue to fulfill their obligations to Bevaris Alliance until they receive written notice of the assignment. The assignee can then enforce the agreement as if they were a party to it, but Bevaris Alliance remains liable for its obligations under the agreement. The franchisee's liability to any assignee cannot exceed their liability to Bevaris Alliance. Bevaris Alliance is also allowed to disclose information about the agreement to potential assignees after notifying the franchisee.