Is granting a pledge 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.
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 pledge 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 seeks to finance their business by using the store's assets as collateral, it is classified as a transfer under the franchise agreement. As such, 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 the franchise and to assess the financial stability of the franchisee.
This provision is fairly standard in franchising, as franchisors typically want to oversee any changes in ownership or control of the franchise business. For a prospective Cd One Price Cleaners franchisee, this means understanding that any significant financial actions, such as using business assets to secure a loan, will require the franchisor's consent. Failing to obtain this approval could be considered a breach of the franchise agreement.