Is granting 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 Cd One Price Cleaners's 2025 Franchise Disclosure Document, the grant of a charge, pledge, or security interest in the Operating Assets is considered a transfer. Specifically, this includes granting 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 seeks to finance their business by using the store's assets as collateral, it is classified as a transfer of interest. As a result, the franchisee would need to obtain prior written approval from Cd One Price Cleaners. This requirement allows Cd One Price Cleaners to maintain control over who has a financial interest in its franchises and to assess the financial stability of the franchisee.
The FDD specifies that any transfer without Cd One Price Cleaners's approval constitutes a breach of the franchise agreement and has no legal effect. Therefore, it is crucial for prospective franchisees to understand these restrictions and to communicate with Cd One Price Cleaners regarding any potential financing arrangements that involve the Operating Assets to avoid violating the terms of the agreement.