Does the release of the Cool Binz Franchise Owner from duties include all obligations?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
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- you, your principals, and the transferee (if we have a prior relationship with the transferee) have signed a general release, in a form satisfactory to us, of any and all claims against us and our shareholders, officers, directors, employees, and agents (such requirement to sign a general release is subject to change in our sole discretion);
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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;
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to the 2025 Cool Binz Franchise Disclosure Document, a general release is required upon assignment of the franchise. Specifically, both the franchisee and their principals, along with the transferee (if Cool Binz has a prior relationship with them), must sign a general release. This release, in a form satisfactory to Cool Binz, covers any and all claims against Cool Binz and its stakeholders, including shareholders, officers, directors, employees, and agents. However, the FDD states that this requirement to sign a general release is subject to change at Cool Binz's sole discretion.
This requirement means that as a Cool Binz franchisee, when transferring your franchise, you, your business partners, and the buyer (under certain conditions) must waive any existing or future claims against Cool Binz. This waiver protects Cool Binz from potential lawsuits or liabilities arising from the franchisee's operation of the business up to the point of transfer. It is a fairly standard practice in franchising to ensure a clean break and protect the franchisor from lingering legal issues after a transfer.
However, in the case of an installment sale where the franchisee provides financing to the transferee, the franchisee must continue to guarantee performance and all payment obligations to Cool Binz until the final closing of the installment sale or final payment of such structured payment arrangement. This indicates that even with a general release, the franchisee may still have ongoing obligations to Cool Binz if they finance the sale of their franchise. Furthermore, if the franchisee finances any part of the sale price, they must agree that the transferee's obligations are subordinate to the transferee's obligation to pay Royalties, Brand Marketing Fees, and other amounts due to Cool Binz.
Prospective franchisees should carefully review the specific terms of the general release and understand the extent of the claims being waived. They should also be aware of the conditions under which they might still have obligations to Cool Binz even after signing a release, such as in the case of installment sales or financed sales. It would be prudent to consult with a legal professional to fully understand the implications of signing such a release and to ensure that their interests are adequately protected.