Are promissory notes from Anago Unit Franchisees considered 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.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, promissory notes from Anago Unit Franchisees are considered Business Assets. Specifically, the document defines "Business Assets" in the context of a security interest granted by a debtor to a secured party. These assets include various items related to the operation of the Anago Subfranchise Business.
Within the definition of "Business Assets," the document explicitly includes "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." This means that any promissory notes that are part of the agreements with Anago Unit Franchisees are considered part of the Subfranchisor's Business Assets.
This designation is significant because it allows the Secured Party to have a security interest in these promissory notes, meaning they can be used as collateral. This has implications for the Subfranchisor's ability to obtain financing or manage their assets, as these notes can be leveraged as part of their business operations. For a prospective franchisee, this highlights the importance of understanding the financial relationships and obligations within the Anago franchise system.