What is the effect of the Coffee News franchisor accepting a payment after a breach or default by the franchisee?
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)
According to Coffee News's 2025 Franchise Disclosure Document, if a franchisee has a Promissory Note with Coffee News, the payment and acceptance of any sum on that note does not represent a waiver of Coffee News's right to pursue other remedies for the franchisee's default. This means that even if Coffee News accepts a payment from a franchisee who is in breach of their agreement, Coffee News still retains the right to exercise its options regarding the breach.
This clause protects Coffee News by ensuring that accepting a payment does not inadvertently relinquish their ability to enforce the franchise agreement's terms. For a prospective Coffee News franchisee, this highlights the importance of adhering to all agreement terms, as making payments alone will not resolve any existing breaches or defaults. The franchisee remains responsible for correcting the underlying issue that led to the breach.
This type of provision is relatively common in franchise agreements. It allows the franchisor to continue receiving payments while addressing the franchisee's non-compliance. However, franchisees should be aware that simply making payments will not excuse any breaches, and the franchisor can still take action to enforce the agreement, including potential termination of the franchise.