For a Clear Pest Pros franchisee, what is the maximum duration for the promissory note?
Clear_Pest_Pros Franchise · 2025 FDDAnswer from 2025 FDD Document
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- in the case of an installment sale, a transaction where Franchisee provides financing to transferee, transferee pays Franchisee via a promissory note or other structured payment plan, Franchisee must continue to guarantee performance and all payment obligations to Franchisor under this Agreement until the final closing of the installment sale or final payment of such structured payment arrangement;
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- if you finance any part of the sale price of the transferred interest, then (a) you agree and will assure that all of the transferee's obligations under any promissory notes or agreements are subordinate to the transferee's obligation to pay Royalties and other amounts due to us and otherwise to comply with this Agreement, (b) you will not hold any security interest reserved in the business, and (c) you will enter into a comfort letter assuring us that the transferee will meet its obligations under the Franchise Agreement, and reaffirming your guaranty of the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the FDD does not specify a maximum duration for the promissory note related to a Clear Pest Pros franchise. The document mentions the use of a promissory note in the context of transferring franchise rights, particularly in situations where the franchisee provides financing to the transferee through an installment sale. In such cases, the franchisee's obligation to the franchisor continues until the final payment of the structured payment arrangement.
However, the FDD does outline certain conditions that must be met if a franchisee finances any part of the sale price of the transferred interest. These conditions include ensuring that the transferee's obligations under any promissory notes are subordinate to the transferee's obligation to pay royalties and other amounts due to Clear Pest Pros. Additionally, the franchisee cannot hold any security interest reserved in the business and must provide a comfort letter assuring Clear Pest Pros that the transferee will meet its obligations under the Franchise Agreement, reaffirming the franchisee's guaranty of the Franchise Agreement.
Since the FDD does not explicitly state the maximum duration for the promissory note, it is important for a prospective franchisee to seek clarification from Clear Pest Pros regarding the terms and conditions of such notes, including any limitations on their duration. Understanding these details is crucial for making informed decisions about franchise transfers and financing arrangements.