What is the Debtor assigning to the Secured Party under the 1-800-GOT-JUNK? General Security Agreement?
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)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, as general and continuing security for the payment and performance of the Obligations, the Debtor grants to the Secured Party a security interest in, and assigns, charges, mortgages and pledges to and in favor 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").
In simpler terms, the franchisee (Debtor) is assigning to 1-800-GOT-JUNK? (Secured Party) a security interest in all assets related to the 1-800-GOT-JUNK? franchise. This includes current and future goods, securities, licenses, vehicles, equipment, and any money generated by the franchise. This assignment acts as collateral, ensuring the franchisee fulfills their financial and performance obligations outlined in the franchise agreement.
This security interest is 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. This means that if 1-800-GOT-JUNK? provides funds to the franchisee to acquire assets (like trucks or equipment), the security interest is considered a "purchase money security interest," giving 1-800-GOT-JUNK? priority claim to those specific assets in case of default.