What happens if a 1-800-GOT-JUNK? franchisee fails to remain in good standing under all Vehicle Leases?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
SCHEDULE B
This is Schedule B to a General Security Agreement
Between
1-800-GOT-JUNK?
LLC, a Delaware limited liability company and
[DEBTOR]
Permitted Encumbrances:
Purchase Money Security Interests held by the lessors or creditors pursuant to Vehicle Leases (as that term is defined in the Franchise Agreement): (i) encumbering no more than the minimum number of Vehicles required under the Franchise Agreement, and (ii) only encumbering the particular Vehicle, and no other property of Debtor.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
I am unable to provide information on the consequences a 1-800-GOT-JUNK? franchisee might face for failing to remain in good standing under all Vehicle Leases, according to the 2025 Franchise Disclosure Document. While the document mentions "Vehicle Leases" in the context of permitted encumbrances under a General Security Agreement, it does not detail the specific repercussions of failing to meet the obligations of those leases.
Specifically, Schedule B of the General Security Agreement outlines that Purchase Money Security Interests held by lessors or creditors pursuant to Vehicle Leases are considered permitted encumbrances. These leases (i) should encumber no more than the minimum number of Vehicles required under the Franchise Agreement, and (ii) should only encumber the particular Vehicle, and no other property of the Debtor.
To fully understand the implications of failing to remain in good standing under all Vehicle Leases, a prospective 1-800-GOT-JUNK? franchisee should ask the franchisor for specific details about the potential consequences, including potential default scenarios, the franchisor's remedies, and the impact on the franchise agreement.