Under what conditions does a Cool Binz franchisee grant CBI a security interest in the equipment?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
- **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 Equipment, any proceeds and products.
The security interest shall continue for the term of this Agreement to secure Franchisee's obligations under this Agreement.
Franchisee authorizes CBI to file a financing statement with regards to the Equipment without the necessity of obtaining an additional signature from Franchisee.
The rights and remedies of CBI as a secured party under this Agreement and under applicable law are cumulative and non-exclusive.
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to the 2025 Cool Binz Franchise Disclosure Document, a franchisee grants CBI (presumably Cool Binz, Inc.) a security interest in the equipment under specific financial circumstances. If CBI finances any portion of the franchisee's purchase of equipment, the franchisee grants CBI a continuing security interest in the equipment. This includes any additions, accessories, attachments, and replacements to the equipment, as well as any proceeds from it.
The security interest exists for the duration of the Franchise Agreement and secures the franchisee's obligations under the agreement. This means that until the franchisee fulfills all financial and contractual obligations to Cool Binz, CBI has a legal claim on the equipment. Cool Binz is authorized to file a financing statement without needing an additional signature from the franchisee, which streamlines the process of recording the security interest.
The FDD specifies that CBI's rights and remedies as a secured party are cumulative and non-exclusive, meaning CBI can pursue multiple avenues to protect its interests. This arrangement protects Cool Binz in case a franchisee defaults on their financial obligations, allowing Cool Binz to repossess and potentially resell the equipment to recoup losses. For a prospective franchisee, this highlights the importance of understanding the financing terms and obligations associated with equipment purchases from Cool Binz.