Is a Coffee News franchisee barred from asserting a defense against Coffee News regarding the financing?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
There is no prepayment penalty. We will hold any such licensed rights to the licensed territories granted under the Coffee News License Agreement as security until you have paid your Promissory Note in full. There are no waivers of your legal rights and you are not barred from asserting a defense against us. We have no current practice or interest to sell, assign or discount to a third party all or part of the financing arrangement. If you do not pay on time, you hereby agree that Coffee News can call the loan and demand immediate payment of the full outstanding balance and obtain court costs and attorney's fees if a collection action is necessary. If Publisher / Debtor is a corporation, professional corporation, partnership, limited liability partnership, or a limited liability company, a Guarantee of Performance by the Principal stockholder(s), general partner(s), or member(s), as the case may be, must be executed.
Source: Item 10 — Financing (FDD pages 16–17)
What This Means (2025 FDD)
According to Coffee News' 2025 Franchise Disclosure Document, a franchisee is not barred from asserting a defense against Coffee News regarding financing. Coffee News may finance additional franchise territory purchases after one year under the agreement through Coffee News USA, Inc. at competitive rates and terms, evidenced by a Promissory Note.
Interest on the financing will be at a 5% APR (Annual Percentage Rate). The term of the financing will vary from two to five years, based on the amount borrowed and the ability to pay, which is determined through negotiations and a review of a personal financial statement. There is no prepayment penalty associated with this financing.
Coffee News will hold the licensed rights to the licensed territories as security until the Promissory Note is paid in full. However, the FDD states that there are no waivers of legal rights, ensuring that franchisees retain their ability to defend themselves against Coffee News in financing-related matters. If a franchisee does not pay on time, Coffee News can demand immediate payment of the full outstanding balance, including court costs and attorney's fees if a collection action is necessary.