What is the effect of the collateral agreement on the transferring All County franchisee?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- 20.4.9. Collateral Agreement. You and your transferring owners have executed an agreement in favor of us agreeing to be bound, commencing on the effective date of the transfer, by the restrictions contained in this Agreement pertaining to the Marks (Article 14), Confidential Information (Article 15) and a Covenant not to Compete (Article 23.4).
Source: Item 23 — Receipts (FDD pages 43–157)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, as a condition of transferring an All County franchise, the transferring franchisee and their owners must execute a collateral agreement in favor of All County. This agreement ensures that, starting from the transfer date, the transferring franchisee remains bound by certain restrictions outlined in the franchise agreement.
Specifically, the collateral agreement covers restrictions related to All County's Marks, which are the brand's trademarks and logos, ensuring that the former franchisee cannot use them in any way that suggests an ongoing affiliation with All County, except for other All County businesses they may own. It also includes restrictions on the use of confidential information, preventing the transferring franchisee from disclosing or using any proprietary information they gained while operating the All County business.
Furthermore, the collateral agreement enforces a covenant not to compete, which prevents the transferring franchisee from engaging in any business that directly competes with All County within a specified geographic area and time frame. This is to protect All County's market share and the interests of its existing franchisees. By signing this agreement, the transferring franchisee agrees to abide by these restrictions, even after they have sold their franchise, ensuring the continued protection of All County's brand, confidential information, and market position.