What agreement regarding payment obligations must a Mrcool franchisee enter into with the franchisor during a transfer?

According to Mrcool's 2025 Franchise Disclosure Document, a franchisee entering into an agreement with Mrcool must agree to subordinate any obligations of the transferee to make installment payments of the purchase price to the franchisee. This subordination ensures that the transferee's obligations to Mrcool, specifically concerning Royalty Fees and Advertising Contributions, take precedence.

In practical terms, this means that if a franchisee sells their Mrcool franchise and the new owner (transferee) is paying them in installments, the franchisee must agree that Mrcool's financial interests come first. Should the new owner face financial difficulties, Mrcool will be prioritized for payments of royalties, advertising fees, and other financial obligations before the previous franchisee receives any further installment payments.

This requirement protects Mrcool's revenue stream and ensures the continued financial health of the franchise system. However, it also introduces a risk for the selling franchisee, as their ability to collect the full purchase price depends on the new owner's ability to meet their financial obligations to Mrcool first. Prospective franchisees should carefully consider this subordination agreement and its potential impact on their financial returns when planning to sell their Mrcool franchise.