What is the All Team franchisee's responsibility regarding indebtedness secured by a Lien on the Collateral?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
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 All Team's 2025 Franchise Disclosure Document, the franchisee, referred to as the Debtor, is responsible for paying indebtedness secured by a Lien on the Collateral. The franchisee must pay all costs incurred by the Secured Party (likely All Team) in obtaining, perfecting, and enforcing the security interest. These costs include attorneys' fees, collection expenses, taxes, assessments, insurance premiums, and any indebtedness secured by a Lien on the Collateral.
This means that if All Team incurs expenses related to the franchisee's collateral, such as legal fees to protect their security interest or costs to maintain insurance on the collateral, the franchisee is responsible for reimbursing All Team for these costs. This also extends to costs associated with repossessing, storing, repairing, or selling the collateral if necessary. The franchisee is essentially responsible for ensuring that all financial obligations tied to the collateral are met, including any debts secured by a lien on it.
This obligation extends to all stages, including 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. This places a significant financial burden on the franchisee to cover all expenses All Team incurs to protect its interest in the collateral, highlighting the importance of carefully managing the business's finances and maintaining a good relationship with All Team to avoid such enforcement actions.