Does the 1-800-GOT-JUNK? General Security Agreement specify any requirements for the Debtor to defend the Collateral against any claims?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
GENERAL SECURITY AGREEMENT
THIS GENERAL SECURITY AGREEMENT is made effective ______________________.
BY:
_________________, having an office at ________________________________
(the "Debtor")
IN FAVOUR OF:
1-800-GOT-JUNK?
LLC, a Delaware limited liability company with an office at
301 – 887 Great Northern Way, Vancouver, BC, V5T 4T5, Canada
(the "Secured Party")
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for 1-800-GOT-JUNK? includes a General Security Agreement as Exhibit G. While the agreement outlines the security interest granted to the franchisor, 1-800-GOT-JUNK? LLC, in the franchisee's assets (the "Collateral") to secure the franchisee's obligations, it does not explicitly state the franchisee's duty to defend the collateral against claims. The agreement focuses on establishing 1-800-GOT-JUNK?'s security interest in the franchisee's assets.
However, the Kansas addendum in the FDD states that franchisees will indemnify and hold 1-800-GOT-JUNK? harmless against liabilities and legal expenses arising from the operation of the franchised business. This suggests the franchisee may bear responsibility for defending against certain claims.
Because the General Security Agreement itself does not detail the franchisee's obligation to defend the collateral, prospective franchisees should seek clarification from 1-800-GOT-JUNK? regarding their responsibilities in protecting the collateral against potential claims or legal actions. It would be prudent to consult with a legal professional to fully understand the implications of the General Security Agreement and any related obligations.