What conditions must be met for the 1-800-GOT-JUNK? Debtor to transfer notes or chattel paper free of trust?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
I am unable to provide information on the conditions that must be met for a 1-800-GOT-JUNK? Debtor to transfer notes or chattel paper free of trust, as this specific information is not present in the provided excerpts from the 2025 Franchise Disclosure Document. The excerpts do discuss the Debtor's obligations and security interests granted to 1-800-GOT-JUNK? LLC. The FDD outlines the security interest the Debtor grants to the Secured Party (1-800-GOT-JUNK? LLC) in all of the Debtor's assets related to the franchised business. This includes goods, securities, instruments, chattel paper, licenses, and money.
While the excerpts detail the obligations secured and the nature of the security interest, they do not specify the conditions under which the Debtor can transfer notes or chattel paper free of this security interest. The security agreement establishes a purchase money security interest to the extent that 1-800-GOT-JUNK? LLC advances funds to enable the Debtor to acquire collateral.
A prospective 1-800-GOT-JUNK? franchisee should consult the full 2025 Franchise Disclosure Document and specifically review the General Security Agreement to understand the conditions under which such a transfer would be permissible. It would be prudent to discuss this with the franchisor and legal counsel to fully understand the implications and requirements.