In an installment sale of a Cool Binz franchise, what obligations does the franchisee retain?

According to Cool Binz's 2025 Franchise Disclosure Document, in an installment sale, where the franchisee provides financing to the transferee through a promissory note or structured payment plan, the franchisee must continue to guarantee performance and all payment obligations to Cool Binz under the Franchise Agreement. This obligation remains until the final closing of the installment sale or the final payment of the structured payment arrangement.

Furthermore, if the franchisee finances any part of the sale price, they must ensure that 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 Cool Binz, and to otherwise comply with the Franchise Agreement. The franchisee cannot hold any security interest reserved in the business and must enter into a comfort letter assuring Cool Binz that the transferee will meet its obligations under the Franchise Agreement, reaffirming the franchisee's guaranty of the Franchise Agreement.

In simpler terms, even after selling the franchise through an installment plan, the original franchisee remains responsible for ensuring the new franchisee meets all financial and operational obligations to Cool Binz. This includes guaranteeing royalty and marketing fee payments and compliance with the franchise agreement. This arrangement protects Cool Binz by ensuring continued performance and payment, even with a new franchisee in place, and places a significant responsibility on the selling franchisee to carefully vet and support the buyer.