What does the security interest granted by the All Team Debtor to the Secured Party secure?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
y of, 20, by and between a, with its principal place of business and chief executive office at (hereinafter called the "Debtor") and ALL TEAM FRANCHISE CORPORATION, a Florida corporation, with its chief executive office at 500 N. Westshore Boulevard, Suite 300, Tampa, Florida 33609 (hereinafter called the "Secured Party").
Background
Secured Party has agreed to make advances and other financial accommodations to Debtor according to the terms and conditions of a Funding Agreement executed on the same date as this Agreement, but only if Debtor delivers to Secured Party the Guaranty Agreement (as defined below) and grants Secured Party a security interest in all property currently owned or later acquired by Debtor to secure the prompt payment and performance of all liabilities, obligations, and indebtedness of Debtor owing to Secured Party. Accordingly, Debtor and Secured Party execute this Agreement to record their understanding.
Operative Terms
Debtor acknowledges the facts and agrees to the understandings described in the background section of this Agreement, and Debtor agrees as follows:
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Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the security interest granted by the Debtor to the Secured Party is to ensure the prompt payment and performance of all liabilities, obligations, and indebtedness of the Debtor to the Secured Party. This is achieved through the Debtor granting a security interest in all property currently owned or later acquired by the Debtor. This includes, but is not limited to, accounts, chattel paper, documents, fixtures, goods (including equipment, inventory, farm products, and consumer goods), general intangibles, instruments, money, and all proceeds and products derived from these items.
In practical terms, this means that All Team requires franchisees to provide a broad security interest in their assets to secure their financial obligations to the company. This security interest allows All Team to claim these assets if the franchisee fails to meet their payment or performance obligations. The agreement also grants All Team a continuing lien upon any and all money, securities, or other property of the Debtor and the proceeds thereof, now or later held or received by or which are in transit to Secured Party from or for Debtor, and also upon any current or future deposits (general or special) or credits of Debtor held by Secured Party and amounts owing to Debtor by Secured Party now or hereafter.
This arrangement is common in franchising, as it protects the franchisor's financial interests. However, prospective All Team franchisees should carefully consider the implications of granting such a broad security interest, as it could put a significant portion of their business and personal assets at risk in the event of a default. Franchisees should seek legal counsel to fully understand the scope of the security interest and negotiate terms that minimize their risk exposure.