Can CDI assign, transfer, discount, or pledge the Chem Dry Business Note?

According to Chem Dry's 2024 Franchise Disclosure Document, Chem Dry (referred to as CDI in the document) has the right to assign, transfer, discount, or pledge the Business Note without providing notice to the franchisee (Borrower). The Business Note represents the balance of the Initial Fee, Initial License Fee, or other amounts owed to CDI by the franchisee under the Chem-Dry Franchise Agreement. The franchisee's obligations to pay this Business Note are absolute, irrevocable, and unconditional, meaning that any claims or defenses arising from the Franchise Agreement do not affect the franchisee's responsibility to pay the Business Note according to its terms.

This clause protects Chem Dry by ensuring they can freely manage or sell the debt represented by the Business Note. For a prospective franchisee, this means that the financial obligation to pay the Business Note remains regardless of any issues that may arise with the franchise agreement itself. It is a common practice in franchising for franchisors to maintain flexibility in managing their financial assets, including the ability to assign or sell promissory notes.

The Business Note can be prepaid in whole or in part without premium, provided that minimum partial payments are $100.00 or any multiple thereof, on the date that any installment comes due. If the franchisee pays the Initial License Fee amount owed pursuant to the Franchise Agreement associated with this Business Note in full within six months of the date of the Business Note, CDI will discount the total due for the Initial License Fee by ten percent. However, prepayments do not affect the obligation to make installment payments until the Business Note is paid in full. All amounts due to CDI are subject to a one-time late fee of $100.00 and accrue interest after the due date at the highest applicable legal rate for open account business credit in the state of the Borrower's domicile, not to exceed 1.5% per month. After maturity, interest accrues on the principal balance at a rate of 18% per annum. A charge of $40.00 is assessed for each installment returned unpaid.

On default, Chem Dry can declare all obligations under the Business Note immediately due and payable. This provision underscores the importance of understanding and meeting the financial obligations outlined in the Business Note and Franchise Agreement. Prospective franchisees should carefully consider their financial capacity and the terms of the Business Note before entering into a franchise agreement with Chem Dry.