How does a Coffee News franchisee request approval to use the franchise as collateral?
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 who wants to pledge or encumber their franchise agreement must obtain express written approval from Coffee News. The franchisor has sole discretion over whether to grant this approval. A franchisee may request this approval if they intend to sell the franchise to a third party who wants to use the franchise as collateral for purchase financing.
The franchisee can request approval to use the franchise as collateral by sending a written request to the address provided under paragraph 14 of the franchise agreement.
Coffee News also retains the authority to extend the term of the franchise agreement beyond its original term. This extension would be to enable a purchaser of the franchise to obtain financing, but only if Coffee News determines the extension is necessary in its sole discretion. This provision could be beneficial to a potential buyer, making the franchise more attractive and easier to finance.