What is the liability upon default of the Cool Binz financing agreement?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
| Source of Financing | Us |
|---|---|
| Amount Financed | Up to 50% |
| Down Payment | Minimum of 50% |
| Term (number of years) | Up to 36 months |
| Rate of Interest plus | 9% |
| Finance Charge | |
| Monthly Payment | Varies depending on amount financed and term. |
| Prepayment Penalty | None |
| Security Required | Personal Guaranty |
| Guaranty | Personal Guaranty |
| Liability upon Default | Termination or other loss of Franchise; you must also pay entire amount due and our attorneys' fees and court costs in collecting debt |
| Loss of Legal Rights Upon Default | You must waive presentation for payment, demand, notice of non-payment, protest, and all other demands and notices required by law (statutory or otherwise) |
Source: Item 10 — FINANCING (FDD pages 35–36)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, if a franchisee defaults on the financing agreement, several consequences may occur. Cool Binz can terminate the franchise agreement, potentially leading to a loss of the franchise itself. Additionally, the franchisee is liable for the entire outstanding amount due under the promissory note.
Furthermore, the franchisee is responsible for covering Cool Binz's attorneys' fees and court costs incurred while collecting the debt. The franchisee must also waive certain legal rights, including the right to presentation for payment, demand, notice of non-payment, protest, and other demands and notices required by law. However, Cool Binz will provide a notice of default and a ten-day period to cure the default before the Franchise Agreement is terminated.
Cool Binz also charges a late fee of 5% or $50 per week, whichever is greater, if payments are not made on time or are returned due to non-sufficient funds. The promissory note survives the termination of the Franchise Agreement, meaning the franchisee's obligation to repay the financed amount continues even if the franchise is terminated. This is a fairly standard clause in franchise financing agreements, as it protects the franchisor's investment and ensures they can recover outstanding debts.