What does the Security Agreement grant to ATFC from the All Team franchisee?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
In connection with the execution of this Funding Agreement, USER agrees to enter into a Security Agreement in the form attached hereto as Exhibit A, which grants to ATFC a security interest in collateral described therein (the "Security Agreement").
USER acknowledges and agrees that ATFC is relying on the representations, warranties and covenants contained in this Section and in the Security Agreement, and any misrepresentation or breach or failure of any thereof shall entitle ATFC to immediately terminate this Funding Agreement.
Source: Item 23 — RECEIPT (FDD pages 34–161)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, in connection with the Funding Agreement, the franchisee (referred to as USER) must enter into a Security Agreement. This Security Agreement grants All Team Franchise Corporation (ATFC) a security interest in the collateral described within that agreement.
All Team emphasizes that it relies on the representations, warranties, and covenants made by the franchisee in both the relevant section of the Funding Agreement and the Security Agreement itself. Any misrepresentation, breach, or failure related to these items gives All Team the right to immediately terminate the Funding Agreement.
In essence, the Security Agreement provides All Team with a legal claim to the franchisee's assets (collateral) as a form of security or guarantee related to the Funding Agreement. This is a fairly standard practice in franchising when the franchisor is providing financing or other support to the franchisee, as it protects the franchisor's investment and ensures the franchisee adheres to the agreement's terms.