What is the procedure for an Anago franchisee to sell inventory secured as collateral?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
one company in effectuating the assignment.
IN WITNESS WHEREOF, each of the undersigned has executed this Conditional
| The Company holds certain master franchisees | through temporary | ownership due | to the abandonment or returned | |---|---|---|---| | master territories. The operations of these master | franchisees | are maintained with | the full intent of finding an | | unrelated party for resale. During the year ended | December | 31, 2024, 2023, | and 2022 the Company held | TITLE: CEO & PRESIDENT
EXHIBIT VII - SECURITY AGREEMENT
| THIS SECURITY AGREEMENT is entered into, on this date, |
|---|
| by and between Corp. Name located |
| at address |
| (Debtor), and Anago Franchising, Inc. (Secured |
| Party). |
AGREEMENT
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;
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the document outlines a security agreement where the franchisee (Debtor) grants the franchisor (Secured Party) a first priority security interest in the franchisee's Business Assets, which acts as collateral. These assets include accounts receivable, books and records, equipment, furniture, fixtures, contracts (including Anago Unit Franchise Agreements), intangible rights, and proceeds from the sale of these assets.
The security interest secures the franchisee's performance of the Subfranchise Rights Agreement, the repayment of any amounts advanced by the franchisor for the maintenance or enforcement of the collateral, and the franchisee's adherence to all agreements within the security agreement. This means that if the franchisee defaults on their obligations, Anago has a legal claim on these assets.
However, the excerpt does not explicitly detail the procedure a franchisee must follow to sell inventory that is secured as collateral. It only establishes Anago's security interest in the franchisee's assets. A prospective franchisee should seek clarification from Anago regarding the specific steps and requirements for selling inventory subject to this security interest, including whether franchisor approval is needed and how the proceeds from such sales would be handled.