How does Coffee News account for repurchased franchise rights when they are repurchased and subsequently sold?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
. In no event shall any monies _, 20, which is called the "maturity date." by time without penalty. | | month until he/she have paid all of the | | | described above that he/she may owe ur | |
The Debtor acknowledges and hereby agrees to grant Holder, with any and all the licensed rights to the territory that was granted to Debtor in the foregoing Coffee News Franchise Agreement, to secure the payment set forth in this Promissory Note and to secure the performance of all covenants and agreements contained herein. In the event of a failure to pay interest, principal or any other amount due on this Promissory Note in accordance with its terms, or of a breach of any other covenant, condition or agreement contained herein, remaining uncured for a period in excess of five (5) days (except that no grace period shall be permitted for a default under this Note or the foregoing Coffee News Franchise Agreement), or any breach in the covenants, conditions or agreements in any instrument given in connection with the Promissory Note and debt secured hereby, or if a proceeding in bankruptcy, receivership or insolvency shall be instituted by or against the undersigned, or if the foregoing Coffee News Franchise Agreement for which the parties have entered into this Promissory Note is terminated for any reason, then the entire debt secured hereby, together with all charges to which Holder would be entitled under the Promissory Note or by law if the Promissory Note were prepaid in full, shall be due and payable, Holder shall have the right to realize upon the security granted herein, and the payment and acceptance of any sum on account of this note shall not be considered a waiver of such right of election. The failure at any time of Holder to exercise this option shall not constitute a waiver of
the right to exercise the right at any other time.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
The 2025 Coffee News Franchise Disclosure Document addresses the scenario where a franchisee's rights may be reacquired by the franchisor. Specifically, if a franchisee defaults on their financial obligations (such as a promissory note) or breaches the franchise agreement, Coffee News, as the 'Holder,' has the right to reclaim the licensed territory. This is treated as a security interest, allowing Coffee News to sell the franchise rights initially granted to the franchisee.
This clause protects Coffee News by ensuring they can recover losses from a defaulting franchisee. It also allows them to maintain the integrity of the franchise system by reassigning the territory to a new, qualified franchisee. The original franchisee essentially grants Coffee News the right to sell their franchise in case of default, similar to a bank foreclosing on a property.
For a prospective Coffee News franchisee, this means understanding the importance of meeting all financial and contractual obligations. Failure to do so could result in losing the franchise and the associated territory. The franchisee should carefully review the terms of the promissory note and franchise agreement to fully understand the conditions that could trigger the franchisor's right to repossess and resell the franchise.