What rights and remedies does CBI have as a secured party under the Cool Binz agreement?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
- 8. GRANT OF SECURITY INTEREST. In the event Franchisee's purchase of the Equipment sold under the Invoice is financed by CBI, Franchisee hereby grants to CBI a continuing security interest in the Equipment sold to Franchisee, and any additions, accessions, accessories, attachments and replacements of such E
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, if a franchisee's equipment purchase is financed by CBI, the franchisee grants CBI a continuing security interest in the equipment, including any additions, accessories, and proceeds. This security interest remains in effect for the agreement's term, securing the franchisee's obligations. Cool Binz is authorized to file a financing statement without needing the franchisee's additional signature. The rights and remedies available to Cool Binz as a secured party are cumulative and non-exclusive, meaning they can pursue multiple avenues of recourse simultaneously.
In cases where a franchisee obtains financing from a lender other than CBI, the lender can be granted a security interest in the equipment, provided they pay CBI any outstanding amounts owed under the Sales Agreement. Upon receiving this payment, CBI's security interest becomes secondary to the lender's. The lender must inform CBI when their financing is repaid and their security interest is released, within 15 days of the event.
The lender's rights are also subject to transfer restrictions outlined in the Sales Agreement. The lender agrees not to take actions against the equipment that conflict with these restrictions. While the lender can assemble the equipment for sale, they cannot use, rent, lease, sell, lend, or donate it. If the lender cannot resell the equipment to another Cool Binz franchisee within 60 days of offering it for sale, Cool Binz will repurchase the equipment as per the agreement. The lender must also provide Cool Binz with copies of any notices related to default, termination, or foreclosure. Overall, these provisions ensure Cool Binz retains significant control and protection over the equipment used in its franchise operations, even when third-party financing is involved.