What is the effect of rights of re-sale 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
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.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to the 2025 FDD, the General Security Agreement with 1-800-GOT-JUNK? establishes a security interest that remains valid and continuous, irrespective of any resale rights. This means that even if the franchisee has the right to resell the secured collateral, 1-800-GOT-JUNK?'s security interest remains in effect. This ensures that 1-800-GOT-JUNK?'s claim on the collateral is not diminished or invalidated by any resale activities undertaken by the franchisee.
The security interest is not affected by any dealings between 1-800-GOT-JUNK? and the franchisee or any other party claiming under or with respect to the franchisee or the collateral. It also remains valid regardless of any other title retention agreement, commercial pledge, or other encumbrance. Even if the franchisee's debt to 1-800-GOT-JUNK? is reduced to zero or repaid and further advances are made, the security interest continues to be effective.
This provision protects 1-800-GOT-JUNK? by ensuring their security interest remains intact, regardless of the franchisee's financial status or dealings with the collateral. For a prospective franchisee, this means understanding that 1-800-GOT-JUNK? has a continuous claim on the specified collateral, which could include vehicles and equipment, even if the franchisee resells those assets. This could impact the franchisee's ability to freely dispose of assets without considering 1-800-GOT-JUNK?'s security interest.