Does the All Team Secured Party have the right to take or release other security for payment of any 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 collateral securing the liabilities. The Secured Party has the option to take or release other security for the payment of any of the liabilities. This means that All Team has the discretion to manage the security interests as they see fit, potentially substituting or relinquishing security as circumstances change. This clause is part of a broader set of rights that allow the Secured Party to manage and protect the collateral effectively.
Additionally, the Secured Party can discharge any lien on the collateral, pay for the costs of insuring, maintaining, and preserving the collateral, and apply any insurance proceeds towards the liabilities. These rights ensure that All Team can take necessary actions to maintain the value and security of the collateral. The Debtor (franchisee) is responsible for reimbursing the Secured Party for any costs incurred in protecting the collateral.
Furthermore, the Secured Party can release any party primarily or secondarily liable for payment of any of the liabilities and apply any other security held by it to satisfy the liabilities, without affecting its rights under the agreement. This provides All Team with flexibility in managing the liabilities and security interests, allowing them to make decisions that best protect their interests. For a prospective franchisee, this highlights the importance of understanding the full scope of the security agreement and the extent of the Secured Party's rights.