What are some examples of actions that would constitute pledging or encumbering the Coffee News agreement?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.14 The sale of Franchise by Franchisee.
Franchisee agrees not to pledge or encumber this Agreement except with the express written approval of Franchisor, to be granted in the Franchisor's sole discretion, which Franchisee may request in the event that Franchisee seeks to sell the Franchise granted hereunder to a third party who desires to use said Franchise as collateral for purchase financing.
Franchisor shall have the authority to extend the term of this Agreement beyond the term set forth in paragraph 3 to enable a purchaser of the Franchise to obtain financing of said purchase if Franchisor, in his sole discretion, determines such extension to be necessary.
Franchisee may request approval of the use of the Franchise granted hereunder as collateral and/or the extension of the term of this Agreement by written request sent to address provided under paragraph 14.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, a franchisee is generally prohibited from pledging or encumbering their franchise agreement without express written approval from Coffee News. One specific example of pledging or encumbering the agreement is the sale of the franchise by the franchisee.
However, Coffee News may grant approval if the franchisee seeks to sell the franchise to a third party who wants to use the franchise as collateral for purchase financing. In such cases, Coffee News has the authority to extend the term of the agreement to enable the purchaser to obtain financing, if Coffee News deems it necessary.
To request approval for using the franchise as collateral or extending the agreement's term, a franchisee must submit a written request to the address provided in the franchise agreement. This process ensures that Coffee News maintains control over the transfer and financing of its franchises, protecting the brand and the interests of other franchisees.