What is an All Team franchisee obligated to do to perfect the security interest?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE shall not grant a security interest, pledge, or place a lien upon FRANCHISEE's Interest in this Agreement or in the Agency or in the assets used in the business, except that FRANCHISEE shall be permitted to grant a security interest in such furniture, fixtures, and equipment to secure FRANCHISEE's obligation to the seller of or lender for such furniture, fixtures, and equipment to secure any indebtedness relating to the business and FRANCHISEE shall be permitted to assign its accounts receivable in connection with any third party financing of employee payroll subject to prior written approval of ATFC.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
Based on the 2025 All Team Franchise Disclosure Document, specific obligations for a franchisee to perfect a security interest are not detailed. However, the FDD does address the franchisee's ability to grant security interests under certain conditions.
Specifically, an All Team franchisee is permitted to grant a security interest in furniture, fixtures, and equipment to secure obligations to the seller or lender of those items. They can also assign accounts receivable for third-party financing of employee payroll, but this requires prior written approval from All Team.
Because the document does not explicitly state the steps a franchisee must take to perfect a security interest, it is important for a prospective All Team franchisee to seek clarification from the franchisor regarding these procedures. Understanding the requirements for perfecting a security interest is crucial for protecting their investment and maintaining compliance with the franchise agreement.