What is the purpose of the General Security Agreement for 1-800-GOT-JUNK? franchisees?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
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")
ARTICLE I - OBLIGATIONS SECURED
1.1
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 protects 1-800-GOT-JUNK? LLC by granting them a security interest in the franchisee's assets. This means that the franchisee is assigning a security interest, mortgaging, and pledging to 1-800-GOT-JUNK? all of their present and after-acquired goods, securities, instruments, documents of title, chattel paper, licenses, intangibles, and money. This collateral must be located on, relating to, or arising in connection with the Franchised Business. It specifically includes all vehicles, equipment, accessories, and proceeds from these items.
The security interest serves as a general and continuing security for the payment and performance of all debts, liabilities, and obligations the franchisee owes to 1-800-GOT-JUNK? LLC. This includes obligations outlined in the Franchise Agreement and the Security Agreement itself.
Furthermore, the security interest created can be considered a purchase money security interest. This applies if 1-800-GOT-JUNK? LLC advances money to enable the franchisee to purchase or acquire any of the collateral, and the money is indeed used for that purpose. A certificate from an officer of 1-800-GOT-JUNK? LLC can serve as proof of this purchase money security interest.