Under what condition will a Coffee News franchise be transferred automatically back to the Franchisor?
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 the 2025 Coffee News Franchise Disclosure Document, the franchise can be transferred back to the holder (likely the franchisor or a designated party) under specific circumstances related to a promissory note. If a franchisee (referred to as the Debtor in this context) fails to meet the obligations of a Promissory Note, the franchise rights can revert to the note's holder. These obligations include failing to pay interest, principal, or any other amount due per the terms of the note, or breaching any covenant, condition, or agreement associated with the note.
More specifically, this transfer can occur if the failure to pay or the breach remains uncured for more than five days. There is no grace period for defaults under the note or the Coffee News Franchise Agreement itself. Additionally, if bankruptcy, receivership, or insolvency proceedings are initiated by or against the franchisee, or if the Coffee News Franchise Agreement is terminated for any reason, the entire debt becomes immediately due.
In such cases, the holder of the promissory note has the right to realize the security granted in the agreement, which includes the power to sell the Coffee News franchise. The acceptance of any payment does not waive the holder's right to exercise this option, and the failure to exercise the option at one time does not prevent its exercise at a later time. This clause ensures that the holder of the promissory note has a secured interest in the Coffee News franchise, protecting their investment in case of the franchisee's financial instability or failure to comply with the franchise agreement and promissory note terms.