Can a Card My Yard franchisee mortgage their interest in the agreement?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
- (7) If you or any of your Owners transfer or attempt to transfer any rights or obligations under this Agreement or any interest in you or the Card My Yard business contrary to the terms of this Agreement, or if a transfer upon death or permanent disability is not made in accordance with Section XV.E.;
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
Based on the 2025 Card My Yard Franchise Disclosure Document, it is not explicitly stated whether a franchisee can mortgage their interest in the franchise agreement. However, the document does state that franchisees cannot transfer any rights or obligations under the agreement. This may extend to prevent a franchisee from using their interest in the franchise as collateral for a mortgage.
Item 4 of the FDD discusses the fees associated with transferring a Card My Yard franchise, which may be relevant if a franchisee were to default on a mortgage and the lender sought to take control of the franchise. Additionally, Item 17 outlines the conditions under which the franchise agreement can be terminated, including if the franchisee attempts to transfer any rights or obligations under the agreement without franchisor approval.
Because the FDD does not directly address the issue of mortgaging the franchise interest, prospective franchisees should seek clarification from Card My Yard regarding their policy on this matter. Understanding the franchisor's stance on using the franchise as collateral is crucial for financial planning and risk assessment.