Does termination of the All Team agreement affect the Secured Party's rights relating to the collateral?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
This Agreement will terminate when (a) any commitment or offer of Secured Party to extend credit to Debtor expires (without renewal by Secured Party) or is terminated by Secured Party and (b) all the Liabilities have been fully paid.
An affidavit or written statement of Secured Party or any agent, officer, or attorney for Secured Party showing or asserting that either any portion of the Liabilities remains unpaid constitutes conclusive evidence of the continuing effectiveness of this Agreement and any interested person is authorized to rely on it.
Upon termination of this Agreement and the request of Debtor, Secured Party shall terminate all effective financing statements in its favor that are then on file with respect to the Collateral.
Source: Item 22 — CONTRACTS (FDD pages 33–34)
What This Means (2025 FDD)
Based on the 2025 All Team Franchise Disclosure Document, the agreement outlines specific conditions for its termination and the secured party's rights regarding the collateral. The agreement terminates when any credit commitment from the secured party expires or is terminated, and all liabilities are fully paid. Even after termination, an affidavit or written statement from the secured party asserting unpaid liabilities serves as conclusive evidence of the agreement's continuing effectiveness.
Upon termination and the debtor's request, the secured party is obligated to terminate all effective financing statements related to the collateral. This indicates that while the agreement itself may terminate, the secured party retains certain rights and control over the collateral until all financial obligations are met and proper documentation is released.
This arrangement protects the secured party's interests by ensuring they can recover outstanding debts through the collateral, even if the franchise agreement ends. For a prospective All Team franchisee, this means understanding the full scope of financial obligations and the secured party's rights over the business's assets, even post-termination. It is important to clarify the process and timeline for releasing the collateral after all debts are settled to avoid potential disputes.