What is the dependency between the Cool Binz Franchise Agreement and the Promissory Note?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
nt form of franchise agreement for a full term, the personal guaranty and all other required exhibits, the terms of which may material differ from the terms of this Agreement;
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- in the case of an installment sale, a transaction where Franchisee provides financing to transferee, transferee pays Franchisee via a promissory note or other structured payment plan, Franchisee must continue to guarantee performance and all payment obligations to Franchisor under this Agreement until the final closing of the installment sale or final payment of such structured payment arrangement;
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- if you finance any part of the sale price of the transferred interest, then (a) you agree and will assure that all of the transferee's obligations under any promissory notes or agreements are subordinate to the transferee's obligation to pay Royalties, Brand Marketing Fees, and other amounts due to us and otherwise to comply with this Agreement, (b) you will not hold any security interest reserved in the business, and (c) you will enter into a comfort letter assuring us that the transferee will meet its obligations under the Franchise Agreement, and reaffirming your guaranty of the Franchise Agreement;
8. you pay us:
- a. our then-current Transfer Fee, as published in our Operations Manual. The Transfer Fee is due upon our preparation of the required transfer documentation (consent to transfer and assignment agreement and/or preparation of transferee's franchise agreement), and is non-refundable at such time;
- b. all Royalties for completed jobs up through the date of closing, fees, amounts owed under any promissory notes with us, Late Payment Fees, Late Report Fees, NSF Fees, Interest Fees, and all other fees or amounts owed to us, plus interest; and
- c. all commissions, broker fees or other similar expenses if: (i) you list the COOL BINZ Business with a broker, lead referral network or similar entity;
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, the Franchise Agreement and the Promissory Note are linked in several ways. The Promissory Note is used to finance the start of a Cool Binz franchised business, confirming its business purpose. The franchisee personally guarantees the Promissory Note as provided in the Franchise Agreement.
The Franchise Agreement stipulates that equipment usage must align with the agreement, and any deviation is considered a breach of both the Franchise Agreement and the Promissory Note. If Cool Binz finances any portion of the equipment purchase, the transferee will pay the proceeds to Cool Binz if there is any outstanding balance under the Promissory Note for the equipment prior to transfer of the Equipment.
In the event of a transfer of ownership where the franchisee provides financing to the transferee via a promissory note, the franchisee must continue to guarantee performance and all payment obligations to Cool Binz under the Franchise Agreement until the final payment of the structured payment arrangement. Furthermore, if the franchisee finances any part of the sale price, the transferee's obligations under any promissory notes must be subordinate to their obligations to pay royalties, brand marketing fees, and other amounts due to Cool Binz under the Franchise Agreement.