Can the All Team Secured Party release any party liable for payment of the liabilities?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
Secured Party, at any time, at its option (i) may discharge any Lien levied or placed at any time on the Collateral and pay the costs of insuring, maintaining, and preserving the Collateral and Debtor shall reimburse Secured Party immediately for any such costs and expenses paid or incurred by Secured Party; (ii) may apply any proceeds of insurance that it receives with respect to any of the Collateral toward payment of the Liabilities, whether or not due, in such order of application as Secured Party determines in its sole discretion; (iii) may take or release other security for payment of any of the Liabilities; (iv) may release any party primarily or secondarily liable for payment of any of the Liabilities; and (v) may apply any other security held by it to the satisfaction of the Liabilities, in each case without prejudice to any of its rights under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the Secured Party has specific rights regarding the liabilities. The Secured Party has the option to release any party who is primarily or secondarily liable for the payment of any of the liabilities. This action can be taken without affecting any of the Secured Party's rights under the agreement.
This provision grants All Team significant flexibility in managing the liabilities and security interests related to the franchise agreement. For a prospective franchisee, this means that All Team could choose to release a guarantor or another party responsible for the debt, which could impact the franchisee's obligations depending on the specifics of their agreement and the circumstances of the release.
It is important for a potential All Team franchisee to fully understand the implications of this clause, particularly concerning who is liable for the liabilities and under what conditions All Team might choose to release a party from their obligations. Franchisees should seek legal counsel to clarify their rights and responsibilities in such scenarios.