Can Chem Dry assign the Business Note to a third party?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
This Business Note represents the balance of the Initial Fee, Initial License Fee, or other amounts payable by Borrower to CDI under that certain Chem-Dry Franchise Agreement between Borrower, as franchisee, and CDI, as franchisor. Borrower's obligations under this Business Note are absolute, irrevocable and unconditional. No defense, claim, set off, or other cause in favor of Borrower arising under the Franchise Agreement shall affect Borrower's obligations to pay this Business Note in accordance with its terms. CDI may assign, transfer, discount or pledge this Business Note without notice to Borrower. Borrower acknowledges that its obligations under this Business Note are independent of and are not conditioned or dependent upon any rights or obligations of the parties to the Franchise Agreement.
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem-Dry's 2024 Franchise Disclosure Document, Chem-Dry has the right to assign the Business Note to a third party without providing notice to the borrower. The Business Note represents the balance of the Initial Fee, Initial License Fee, or other amounts payable by the borrower (franchisee) to CDI (Chem-Dry). The borrower's obligations under the Business Note are absolute, irrevocable, and unconditional, meaning that any claims or defenses arising from the Franchise Agreement do not affect the borrower's obligation to pay the Business Note according to its terms.
This clause protects Chem-Dry by ensuring they can collect the amounts due under the Business Note regardless of any disputes the franchisee might have related to the Franchise Agreement. It also allows Chem-Dry to obtain financing or capital by assigning or pledging the Business Note to a third party.
For a prospective Chem-Dry franchisee, this means that if they finance part of their initial fees through a Business Note, Chem-Dry can sell or transfer that note to another party, such as a bank or financing company. The franchisee would then be obligated to make payments to that third party instead of directly to Chem-Dry. This transfer can occur without the franchisee's prior knowledge or consent. Franchisees should be aware of this possibility and understand that their payment obligations remain firm even if the note is assigned.