For All Team, what is secured by the collateral if the Secured Party employs counsel after a default?

According to All Team's 2025 Franchise Disclosure Document, if the Secured Party employs counsel after a default to enforce any rights against the Debtor or any other person obligated to the Secured Party under the agreement, the reasonable costs, fees, and expenses incurred by the Secured Party will be payable by the Debtor on demand. These costs, fees, and expenses will be secured by all of the Collateral.

This means that if an All Team franchisee defaults on their obligations and All Team (as the Secured Party) has to hire a lawyer to enforce its rights, the franchisee will be responsible for covering All Team's legal costs. Furthermore, All Team can use the collateral provided by the franchisee to secure the payment of these legal fees, in addition to the original debt.

This provision protects All Team by ensuring they can recover legal costs incurred due to a franchisee's default. For a prospective franchisee, this highlights the importance of fulfilling their obligations under the franchise agreement to avoid triggering a default and incurring additional expenses for legal fees, which would then be secured by their collateral. Franchisees should carefully review the default provisions in their agreement and understand the potential financial consequences of non-compliance.