Does the definition of 'Business Assets' for Anago include proceeds from the sale of equipment?
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 definition of 'Business Assets' includes proceeds from the sale or disposition of equipment. Specifically, the agreement between the debtor and secured party grants the secured party a first priority security interest in the debtor's business assets, which are considered collateral. This collateral encompasses various assets related to the Anago subfranchise business.
The definition of 'Business Assets' includes all of the debtor's accounts receivable, books, and records pertaining to those receivables, and all equipment, furniture, and fixtures located at any owned or controlled site of the debtor. It also covers all contracts related to the business, including Anago Unit Franchise Agreements, promissory notes, and leases. Furthermore, 'Business Assets' include all intangible rights related to the agreement and the subfranchise business.
Most importantly, the definition explicitly includes 'all proceeds upon sale or other disposition of any of the foregoing.' This means that if a franchisee sells equipment, furniture, fixtures, or any other assets included in the definition of 'Business Assets', the proceeds from that sale are also considered part of the 'Business Assets' and are subject to the security interest granted to the secured party. This has significant implications for a franchisee, as it means that Anago has a secured interest in proceeds from the sale of business assets.