In the Anago agreement, what is the scope of 'Accounts Receivable' included in the Debtor's Business Assets?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Debtor grants to Secured Party a first priority security interest in Debtor's Business Assets (the "Collateral"). For purposes of this Agreement, Debtor's "Business Assets" shall mean: (a) all of Debtor's accounts receivable arising out of, or in connection with, the operation of Debtor's Anago Subfranchise Business, existing as of the date of this Agreement and which come into existence during the Term of the Anago Subfranchise Rights Agreement by and between Debtor and Secured Party, including notes, negotiable instruments, contracts and the Unit Franchisee obligations for the payment of money, all client accounts and their account receivables, all proceeds owing from trips, clubs, parties, lessons, video studies and any other services or activities connected with the operation of the Subfranchise Business (the "Accounts Receivable"); (b) all books and records pertaining to the Debtor's Accounts Receivable; (c) all equipment, furniture and fixtures located at any owned or controlled site of Debtor; (d) all contracts related to each and every Business within the Area including all Anago Unit Franchise Agreements, promissory notes and any leases to which Debtor is a party; (e) all intangible rights related to this Agreement and the Subfranchise Business; and (f) all proceeds upon sale or other disposition of any of the foregoing. The capitalized terms in this Agreement shall have the meanings defined herein and in the Subfranchise Rights Agreement by and between Debtor and Secured Party.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the "Debtor's Business Assets" include all of the debtor's accounts receivable arising out of, or in connection with, the operation of the Anago Subfranchise Business. This includes accounts receivable existing as of the date of the agreement and those that come into existence during the term of the Anago Subfranchise Rights Agreement. These assets serve as collateral for the agreement.
Specifically, the accounts receivable encompass notes, negotiable instruments, contracts, and the Unit Franchisee obligations for the payment of money. It also includes all client accounts and their account receivables, all proceeds owing from trips, clubs, parties, lessons, video studies, and any other services or activities connected with the operation of the Subfranchise Business.
In essence, this means that Anago has a security interest in all the money owed to the franchisee by its customers (clients) for services rendered. This security interest ensures that Anago can recover funds if the franchisee defaults on their obligations under the Subfranchise Rights Agreement. This is a common practice in franchising to protect the franchisor's financial interests.