Can a Coffee News franchisee's interest in the license be subject to garnishment?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.3 Spendthrift Provision. This license will be and remain personal and exclusive to Franchisee to the fullest extent authorized or permitted by law. No part of any interest of Franchisee under the provisions of this instrument will be subject to garnishment, levy, or seizure by any creditor or any other person claiming against or in the right of Franchisee under any proceeding or writ at law or in equity. Franchisee agrees not to pledge or encumber this Agreement, without the express written consent of the Franchisor.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, the license granted to a franchisee is intended to be personal and exclusive, to the extent permitted by law. The agreement includes a "spendthrift provision" designed to protect the franchisee's interest in the license.
Specifically, the FDD states that no part of a franchisee's interest under the franchise agreement will be subject to garnishment, levy, or seizure by creditors or other persons making claims against the franchisee. This protection extends to proceedings or writs at law or in equity. Additionally, the franchisee is prohibited from pledging or encumbering the agreement without the express written consent of Coffee News.
This provision aims to safeguard the franchisee's rights and interests in the Coffee News franchise from financial claims or legal actions. It ensures that the franchisee can operate the business without the constant threat of losing their license due to debts or legal judgments, offering a degree of financial security. However, it's important to note that the protection is only to the fullest extent authorized or permitted by law, meaning that the actual enforceability of this provision can depend on specific jurisdictional laws and court interpretations.