Does the 1-800-GOT-JUNK? General Security Agreement replace or supplement existing security interests held by the Secured Party?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
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)
According to the 2025 FDD, the General Security Agreement for 1-800-GOT-JUNK? does not replace existing security interests. Instead, it acts as an addition to any other assignments, mortgages, pledges, charges, or security interests that 1-800-GOT-JUNK? currently holds or may hold in the future from the franchisee (Debtor) or any other person. This agreement serves as a general and continuing security measure for all debts, liabilities, and obligations the franchisee owes to 1-800-GOT-JUNK?.
This means that if a prospective 1-800-GOT-JUNK? franchisee already has existing financial obligations or enters into new ones, this security agreement will be in addition to those. It provides 1-800-GOT-JUNK? with an extra layer of security for the franchisee's performance of their obligations, including those outlined in the Franchise Agreement.
The agreement grants 1-800-GOT-JUNK? a security interest in all of the franchisee's present and future assets related to the franchised business. This includes items like vehicles, equipment, accessories, and any proceeds generated from these assets. Furthermore, the security interest 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 were so used. This comprehensive security interest ensures that 1-800-GOT-JUNK? has a claim on a wide range of the franchisee's business assets in case of default.