At a public sale of collateral, is the Anago Secured Party permitted to bid for and purchase the collateral?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) At any public sale or sales made under this Section 9 or authorized herein or by laws, or at any sale or sales made upon judicial foreclosure of this security interest, Secured Party (or its representative) may bid for and purchase any Collateral being sold and, in the event of such purchase, shall hold such property thereafter discharged of all rights of redemption.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, in the event of a public sale of collateral, the Secured Party (or its representative) has the option to bid for and purchase any collateral being sold. If the Secured Party does purchase the collateral, they will then hold the property free from any rights of redemption. This means that once Anago or its representative purchases the collateral at a public sale, the debtor (franchisee) no longer has the right to reclaim or recover the property. This clause is designed to protect Anago's interests and ensure they can recover losses in case of franchisee default.
This provision is typical in franchise agreements where the franchisor takes a security interest in the franchisee's assets. It allows Anago to efficiently liquidate the assets and recoup outstanding debts. The franchisee should understand that this clause could result in the loss of their business assets if they fail to meet their obligations under the Subfranchise Rights Agreement.
It is important for a prospective Anago franchisee to fully understand the implications of this clause and how it could affect their business and personal assets in the event of a default. They should seek legal counsel to review the security agreement and understand their rights and obligations.