What is the acknowledgement of the Franchise Owner(s) and Franchisee regarding the payment of the purchase price over time in the Cool Binz agreement?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
[TRANSFERS – WHEN BUYER IS PAYING IN INSTALLMENTS] FRANCHISE OWNER(S) and Franchisee acknowledge and agree (i) that they negotiated the sale of their franchise to Buyer Company without the assistance, or any other involvement of the Franchisor; (ii) that the purchase price for such sale (the "Purchase Price") will not be paid in full at closing, but will be paid over a period of time after closing, and (iii) that they are assuming the full risk of nonpayment of the Purchase Price, FRANCHISE OWNER(S) and Franchisee further agree that they will not, in any manner, at any time, under any set of circumstances, seek payment of any portion of the Purchase Price from Cool Binz International, LLC, and/or any of its directors, officers, members, shareholders, employees, agents, representatives, heirs, successors or assigns.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to the 2025 Cool Binz Franchise Disclosure Document, when a franchise is sold and the buyer pays in installments, the Franchise Owner(s) and Franchisee acknowledge several key points. First, they confirm that they negotiated the sale of their franchise to the buyer without any assistance or involvement from Cool Binz itself. Second, they acknowledge that the full purchase price won't be paid at closing but will be paid over a period of time after the closing date. Finally, they explicitly agree to assume the full risk of nonpayment of the purchase price by the buyer.
This agreement has significant implications for the seller. The Franchise Owner(s) and Franchisee specifically agree that they will not seek payment of any portion of the purchase price from Cool Binz International, LLC, or any of its affiliates, under any circumstances. This means that if the buyer defaults on the installment payments, the seller cannot turn to Cool Binz for recourse; the risk of non-payment rests solely with the seller.
This arrangement is not uncommon in franchise resales, but it places a considerable burden on the seller to vet the buyer's financial stability and creditworthiness thoroughly. Cool Binz is essentially uninvolved in the financing arrangements between the seller and buyer, protecting itself from any financial risk associated with the transfer. Prospective sellers should carefully consider the financial implications and risks before agreeing to such terms and potentially seek legal and financial advice.