Can Deck Medic assign a franchisee's promissory note to a third party?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
We have no plans to sell or assign any Note from you or any other franchisee to a third party; however, we have the right to do so in the future. Upon any sales or assignment, we will not remain primarily obligated to provide the financial goods or services.
We will provide a promissory note (a "Note") for the amount financed and any financing charges that you, or, if you are a Corporate Entity, each of your members, shareholders, and partners and each of these parties' spouses must sign the Note if we agree to offer you direct financing on your Initial Franchise Fee. You are required to return an original signed copy of the Note to us. We have the right to assign your Note to a third party. Additionally, if you enter into a Note with us for a new Deck Medic Business, we require that you open the Deck Medic Business within six months of your receipt of the funding provided under the Note.
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, Deck Medic has the right to assign a franchisee's promissory note to a third party. While Deck Medic states they have no current plans to sell or assign any notes from franchisees to a third party, they retain the right to do so in the future. If such a sale or assignment occurs, Deck Medic will no longer be primarily obligated to provide the financial goods or services.
This means that a Deck Medic franchisee who obtains financing directly from Deck Medic could find their promissory note held by a different entity at some point. This new entity would then be responsible for servicing the loan and collecting payments. While the terms of the note itself should remain the same, dealing with a new lender could present unforeseen challenges or require adjustments in payment procedures.
Furthermore, the FDD states that if Deck Medic offers direct financing on the initial franchise fee, the franchisee, and if applicable, their members, shareholders, partners, and their spouses, must sign the promissory note. Deck Medic also requires the franchisee to open their Deck Medic Business within six months of receiving funding under the note. This creates a relatively short timeline for franchisees to become operational after securing financing.