Is a charge on the Operating Assets considered a transfer by Cd One Price Cleaners?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
(f) the grant of a mortgage, charge, pledge, collateral assignment, lien or security interest in any interest in this Agreement, the Store, any of the Operating Assets or an ownership interest in Franchisee; foreclosure upon or attachment or seizure of the Store or any of its Operating Assets or any interest in Franchisee; or Franchisee's transfer, surrender or loss of the Store's possession, control or management.
12.3 Conditions for Franchisor's Approval of Transfer.
If Franchisee is in full compliance with this Agreement, then, subject to the other provisions of this Article 12, Franchisor will not unreasonably withhold its approval of a transfer that meets all the requirements in this Section.
Source: Item 23 — Receipts (FDD pages 72–263)
What This Means (2025 FDD)
According to the 2025 Cd One Price Cleaners FDD, a charge on the Operating Assets is considered a transfer. Specifically, the FDD states that the term "transfer" includes the grant of a mortgage, charge, pledge, collateral assignment, lien, or security interest in any interest in the Agreement, the Store, any of the Operating Assets, or an ownership interest in the Franchisee.
This means that if a Cd One Price Cleaners franchisee places a charge on their Operating Assets, it is legally considered a transfer of interest. As such, the franchisee would need to obtain prior written approval from Cd One Price Cleaners for the transaction. Failure to obtain this approval would constitute a breach of the franchise agreement.
This requirement allows Cd One Price Cleaners to maintain control over who has interests in the franchise and its assets. It ensures that any third party gaining an interest meets their standards and won't negatively impact the brand. For a franchisee, this means carefully planning any financing or leveraging of assets and adhering to the franchisor's approval process to avoid violating the agreement.