What is the All Team franchisee's responsibility regarding the condition of the collateral?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Condition of Collateral.
Debtor shall keep the Collateral in good repair, condition and working order, and shall not waste or destroy the Collateral.
- (d) Payment of Costs.
Debtor shall pay all costs incurred by Secured Party in obtaining, perfecting, and enforcing the security interest created by this Agreement and in collecting the Liabilities and preserving the Collateral, including: attorneys' fees, costs, and expenses; costs and expenses of collection efforts by Debtor's employees; taxes, assessments, insurance premiums, and indebtedness secured by a Lien on the Collateral; and the cost of repossessing, taking, removing, storing, repairing, altering, renovating, registering, and selling any of the Collateral and any property to which the Collateral is affixed or attached.
In this Agreement, the term "costs" includes all internal expenses as well as expenses and attorneys' fees incurred in all matters of interpretation and enforcement, before, during, and after demand, suit, proceeding,
trial, appeal, and post-judgment efforts as well as efforts in bankruptcy, reorganization, or similar proceedings.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to the 2025 All Team Franchise Disclosure Document, the franchisee (referred to as 'Debtor' in this context) is responsible for maintaining the collateral in good condition. Specifically, the franchisee must keep the collateral in good repair, condition, and working order, and must not waste or destroy it. This requirement ensures that the assets used as security for any financing or obligations are preserved and retain their value.
In addition to maintaining the condition of the collateral, the All Team franchisee is also responsible for covering all costs associated with the collateral. This includes costs incurred by the secured party (likely All Team or a lending institution) in obtaining, perfecting, and enforcing the security interest. These costs can include attorneys' fees, collection expenses, taxes, insurance premiums, and any expenses related to repossessing, storing, repairing, or selling the collateral.
The franchisee's obligation to pay these costs extends to all stages of the process, including efforts before, during, and after any legal proceedings, such as trials, appeals, and even bankruptcy or reorganization efforts. This comprehensive responsibility highlights the financial commitment and potential risks associated with securing financing or using assets as collateral within the All Team franchise system. Franchisees should carefully consider these obligations and ensure they have adequate financial resources to meet these requirements.
This type of clause is standard in franchise agreements where collateral is involved, as it protects the franchisor's or lender's interest in the secured assets. Prospective All Team franchisees should fully understand the implications of this clause and factor these potential costs into their financial planning. It is advisable to consult with financial and legal professionals to assess the risks and ensure they can meet these obligations.