What actions are required to comply with the 'Security Agreement' mentioned in Section 2.8 of the 1-800-GOT-JUNK? Franchise Agreement?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
(the "Debtor") IN FAVOUR OF: 1-800-GOT-JUNK? LLC, a Delaware limited liability company with an office at 301 – 887 Great Northern Way, Vancouver, BC, V5T 4T5, Canada (the "Secured Party") ARTICLE I - OBLIGATIONS SECURED 1.1 This Security Agreement and the assignments, mortgages, pledges, charges and security interests hereby created are in addition to and not in substitution for any other assignment, mortgage, pledge, charge or security interest now or hereafter held by the Secured Party from the Debtor or from any other Person whomsoever and shall be general and continuing security for the due performance of all debts, liabilities, and obligations of the Debtor to the Secured Party, including the obligations contained in one or more franchise agreements (the "Franchise Agreement") made between the Secured Party (as Franchisor) and the Debtor (as Franchisee) and this Security Agreement (all of said debts, liabilities and obligations are hereinafter collectively called the "Obligations"). ARTICLE II - SECURITY INTEREST 2.1 As general and continuing security for the payment and performance of the Obligations, the Debtor hereby grants to the Secured Party a security interest in, and assigns, charges, mortgages and pledges to and in favour of the Secured Party, all of the Debtor's present and after acquired goods, securities, instruments, documents of title, chattel paper, licenses, intangibles and money located on, relating to or arising in connection with a Franchised Business (as defined in the Franchise Agreement) including, without limitation, all vehicles, equipment and accessories and all proceeds from the foregoing wheresoever situate (collectively, the "Collateral"). 2.2 The security interest created hereby shall be a purchase money security interest to the extent that any of the Obligations are monies advanced by the Secured Party to enable the Debtor to purchase or otherwise acquire any of the Collateral and were so used and, without limitation, a certificate of an officer of the Secured Party as to the extent that the Obligations are monies so advanced shall be prima facie proof of the purchase money security interest created hereby. 2.3 The security interest created hereby shall be a general and continuing security interest notwithstanding any dealing by the Secured Party with the Debtor or any other person claiming under or with respect to the Debtor or the Collateral, notwithstanding any other title retention agreement, commercial pledge, right of re-sale, security interest or other encumbrance whatsoever, and notwithstanding that the 4923-7432-4805.1 indebtedness of the Debtor to the Secured Party may be reduced to a nil balance or be repaid and further advances made from time to time. ARTICLE III - SALES IN ORDINARY COURSE OF BUSINESS 3.1 The Debtor shall have no right to sell, lease or dispose of any of the Collateral except for a sale in the ordinary course of business upon customary sales terms for value received and then only upon the express condition that on or before delivery to a third party the Debtor shall secure full settlement of the entire purchase price for the Collateral so sold in cash, notes, chattel paper or other property in form satisfactory to the Secured Party.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document (FDD) for 1-800-GOT-JUNK? outlines the obligations and security interests associated with the Security Agreement. As per Article I, the Security Agreement acts as a general and continuing security for all debts, liabilities, and obligations the franchisee owes to 1-800-GOT-JUNK?, including those outlined in the Franchise Agreement. This agreement is in addition to any other security interests 1-800-GOT-JUNK? may hold.
Article II of the Security Agreement details the security interest granted by the franchisee (Debtor) to 1-800-GOT-JUNK? (Secured Party). The franchisee grants a security interest in all present and after-acquired goods, securities, instruments, chattel paper, licenses, intangibles, and money related to the franchised business. This includes vehicles, equipment, accessories, and all proceeds from these items. The security interest is a purchase money security interest to the extent that 1-800-GOT-JUNK? advances money to enable the franchisee to purchase or acquire any of the collateral, and the funds are used for that purpose.
Schedules B and C to the General Security Agreement provide further details. Schedule B requires the franchisee to disclose information such as their date and place of birth, principal residence, type of entity (if applicable), jurisdiction of formation, and states where they are authorized to carry on business. It also lists permitted encumbrances, specifically purchase money security interests held by lessors or creditors pursuant to vehicle leases, encumbering only the minimum number of vehicles required and only those particular vehicles. Schedule C lists contact persons for both the franchisee (Debtor) and 1-800-GOT-JUNK? (Secured Party), with Brian Scudamore listed as the contact person for the Secured Party.