What happens if a Cool Binz franchisee becomes insolvent?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provisions | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| or any other lien is placed against you and not released or bonded within 30 days; (xx) you become insolvent; (xxi) you order or purchase supplies, signs, furnishings, fixtures, equipment or inventory from an unapproved supplier; (xxii) you misuse or make unauthorized use of any COOL BINZ /Required Software; (xxiii) you fail to comply with the anti-terrorism provision; (xxiv) you take for your own personal use any assets or property of the COOL BINZ Business; or (xxv) if there are insufficient funds in your bank account to cover a check or EFT payment 3 or more times within any 12-month period or you fail to achieve minimum sales for 3 consecutive months. These provisions are subject to state law. | |||
| i. | Franchisee's obligations on termination/no n-renewal | Section 13 | Upon termination or early expiration of the Franchise Agreement, your obligations include: (i) pay all amounts owed to us; (ii) de identify and otherwise stop using the Marks in any manner, including in business names and telephone listings; (iii) return all Confidential Information and customer lists to us; (iv) comply with post-term non-competition covenants; and (v) deliver proof of compliance. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–58)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, if a franchisee becomes insolvent, it constitutes a cause for termination of the franchise agreement. The FDD outlines several scenarios that can lead to termination, including insolvency.
Upon termination of the Franchise Agreement, the franchisee has several obligations. These include paying all outstanding amounts owed to Cool Binz, ceasing all use of Cool Binz's trademarks and intellectual property, returning all confidential information and customer lists, complying with post-term non-competition covenants, and providing proof of compliance with these obligations. These obligations are fairly standard in franchise agreements to protect the franchisor's brand and proprietary information.
It is important for a prospective Cool Binz franchisee to understand the conditions that can lead to termination of the franchise agreement, including insolvency. Franchisees should carefully review Section 13 of the Franchise Agreement, as referenced in Item 17 of the FDD, to fully understand their obligations upon termination or expiration of the agreement.