Does the 1-800-GOT-JUNK? General Security Agreement specify any consequences if the Debtor fails to secure full settlement of the purchase price?
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 FDD, the General Security Agreement outlines the security interests granted to 1-800-GOT-JUNK? LLC. As continuing security for the performance of obligations, the Debtor grants 1-800-GOT-JUNK? a security interest in the Debtor's goods, securities, instruments, chattel paper, licenses, intangibles, and money related to the Franchised Business. This includes vehicles, equipment, accessories, and proceeds.
The security interest is a purchase money security interest to the extent that 1-800-GOT-JUNK? advances monies to enable the Debtor to purchase or acquire collateral. A certificate from an officer of 1-800-GOT-JUNK? serves as proof of this interest.
The document does not explicitly detail the consequences if the Debtor fails to secure full settlement of the purchase price, but it does state that the security interest is a general and continuing security interest. It also states that the agreement benefits the Secured Party, its successors and assigns and binds the Debtor and its heirs, executors, personal representatives, successors and assigns.