Is a collateral assignment of 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 Cd One Price Cleaners' 2025 Franchise Disclosure Document, the grant of a collateral assignment, lien, or security interest in the Operating Assets is considered a transfer. Specifically, Item 12.2 outlines various events that constitute a transfer requiring the franchisor's approval.
This means that if a Cd One Price Cleaners franchisee seeks to obtain financing by using the Operating Assets as collateral, it is considered a transfer of interest. As such, the franchisee must obtain prior written approval from Cd One Price Cleaners. Failure to do so constitutes a breach of the franchise agreement.
This requirement allows Cd One Price Cleaners to maintain control over who has rights to the assets used in the operation of the franchise. It also ensures that any potential changes in control or ownership meet their standards. A prospective franchisee should carefully consider these restrictions on transferability, as they could impact their ability to obtain financing or exit the business.