What is a Cool Binz franchisee required to do to keep the equipment free and clear of liens?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee covenants with CBI to (i) use and maintain the Equipment in a lawful manner and so as not to violate any law or regulation of the state, city or other political subdivisions in which Franchisee uses the Equipment; (ii) return, pay and file when due all taxes, fees and similar charges, including without limitation sales or use tax, and ad valorem and personal property taxes, imposed on the ownership, possession or use of the Equipment; (iii) keep the Equipment free and clear of all liens, security interests, claims and encumbrances except for those incurred through the initial financing of the Equipment with CBI or from a vendor approved by CBI; (iv) obtain and maintain property insurance on the Equipment covering loss, damage, theft, vandalism and casualty; (v) maintain the Equipment per the manufacturer's maintenance, repair and replacement instructions; (vi) maintain in place any notices, labels or other indicia provided by CBI to indicate that the Equipment is subject to this Agreement; (vii) operate the Business as required under the Franchise Agreement; and (viii) notify CBI when any party claims any interest in the Equipment.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, franchisees have specific obligations to maintain the equipment used in their business. To keep the equipment free and clear of liens, security interests, claims, and encumbrances, franchisees must avoid actions that could lead to such issues. The only exception to this rule is if the liens are incurred through the initial financing of the equipment with Cool Binz or from a vendor approved by Cool Binz.
In practical terms, this means a Cool Binz franchisee cannot use the equipment as collateral for loans from unapproved lenders or allow judgments or tax liens to be placed against the equipment. Franchisees must be diligent in managing their business finances and ensuring compliance with all legal and financial obligations to prevent any claims against the equipment.
This requirement protects Cool Binz's interest in the equipment and ensures that the franchisee's business operations are not disrupted by legal or financial claims. It also aligns with standard franchising practices, where franchisors often have specific requirements to protect their brand and assets. Franchisees should carefully manage their financial obligations and only use approved financing methods to avoid violating this covenant.