What is the effect of commercial pledges on the security interest created by the 1-800-GOT-JUNK? General Security Agreement?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the General Security Agreement between 1-800-GOT-JUNK? LLC and the franchisee (Debtor) establishes a security interest as general and continuing security for the franchisee's obligations to 1-800-GOT-JUNK?. This security interest is in addition to any other security interests held by 1-800-GOT-JUNK? from the Debtor or any other person. The agreement covers all debts, liabilities, and obligations of the Debtor to 1-800-GOT-JUNK?, including those in the Franchise Agreement and the Security Agreement itself.
The Debtor grants 1-800-GOT-JUNK? a security interest in all of the Debtor's present and after-acquired goods, securities, instruments, documents of title, 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 acts as collateral for the franchisee's obligations.
The security interest created by the General Security Agreement is a purchase money security interest to the extent that 1-800-GOT-JUNK? advances money to enable the Debtor to purchase or acquire any of the Collateral, and the Debtor uses the advanced funds for that purpose. A certificate from an officer of 1-800-GOT-JUNK? serves as proof of the extent to which the obligations are monies so advanced, establishing the purchase money security interest.