Under what circumstances can a Cool Binz franchisee recover damages from the surety bond?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
all have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
The California Department of Financial Protection and Innovation has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a requirement for us to maintain a surety bond under California Corporations Code section
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, a franchisee in California may be able to recover damages from a surety bond. Because Cool Binz has not demonstrated adequate capitalization, the California Department of Financial Protection and Innovation requires Cool Binz to maintain a surety bond. This bond is available for franchisees to recover damages if Cool Binz fails to fulfill its obligations to open the franchisee's franchised business. The surety bond is in the amount of $59,900 with the Hartford.
This means that if Cool Binz fails to meet its obligations to help a franchisee open their business, the franchisee can make a claim against the surety bond to recover financial losses. This provides a level of financial protection to the franchisee in the event that Cool Binz does not uphold its end of the franchise agreement during the initial setup phase.
It is important for prospective Cool Binz franchisees in California to understand the conditions under which they can make a claim against the surety bond. Franchisees should request a copy of the surety bond agreement from Cool Binz to fully understand their rights and the process for making a claim. Franchisees should also confirm with the Hartford, the surety bond provider, that the bond is active and in good standing.