Is a pledge 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 pledge, collateral assignment, lien, or security interest in any of the Operating Assets is considered a transfer. This falls under the broader category of actions that require the franchisor's prior written approval.
This means that if a franchisee wants to use the Operating Assets as collateral for a loan or any other form of security interest, it is classified as a transfer of interest. As such, the franchisee must obtain approval from Cd One Price Cleaners. Failure to get this approval constitutes a breach of the franchise agreement.
This requirement allows Cd One Price Cleaners to maintain control over who has rights to the assets essential for operating the franchise. It also protects the brand by ensuring that the assets are not encumbered in a way that could negatively impact the business's operations or reputation. The franchisee should be aware of this stipulation and factor in the time and potential costs associated with obtaining franchisor approval when considering such financial arrangements.