Is pledging the Franchise Agreement as security to someone other than Petro Stopping Center considered a transfer?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
- (vi) pledge of this Agreement (to someone other than us) or of an ownership interest in you as security, foreclosure upon the Petro Center, or the Operating Assets, including your transfer, surrender or loss of possession, control or management of the Lease or your Petro Center.
Source: Item 14 — Other investments (FDD pages 131–208)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, pledging the Franchise Agreement to someone other than Petro Stopping Center is considered a transfer. Specifically, the FDD states that a transfer includes the "pledge of this Agreement (to someone other than us)."
This means that if a franchisee wants to use their Franchise Agreement as collateral for a loan or other financial obligation with a third party, it is classified as a transfer under the agreement. As a result, the franchisee would need to obtain prior written approval from Petro Stopping Center. Transferring the agreement without approval constitutes a breach of the agreement and is void.
Petro Stopping Center retains the right to approve or deny any transfer in its sole discretion. This provision allows Petro Stopping Center to maintain control over who operates a franchise and ensures that any third party assuming the agreement meets their standards. The FDD outlines several conditions that must be met prior to any approved transfer, including compliance with the agreement, the transferee's good moral character and financial resources, payment of all outstanding amounts, completion of training, and agreement to be bound by the franchise terms.