Under the Anago agreement, does the definition of 'Business Assets' include proceeds from the sale of equipment, furniture, or fixtures located at any owned or controlled site of the Debtor?
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 agreement specifies that 'Business Assets' include proceeds from the sale of equipment, furniture, and fixtures located at any owned or controlled site of the Debtor. This is part of the collateral that the Debtor (the franchisee) grants to the Secured Party (Anago) as a security interest. This collateral secures the franchisee's obligations under the Subfranchise Rights Agreement.
Specifically, the definition of 'Business Assets' encompasses several categories. These include accounts receivable arising from the Anago Subfranchise Business, all books and records pertaining to these receivables, all equipment, furniture, and fixtures at owned or controlled sites, all contracts related to the business within the area (including Anago Unit Franchise Agreements), intangible rights related to the agreement and subfranchise business, and all proceeds from the sale or disposition of any of the aforementioned assets. This broad definition ensures that Anago has a comprehensive security interest in the franchisee's business assets.
For a prospective Anago franchisee, this means that Anago has a secured interest in a wide range of assets, including proceeds from the sale of equipment, furniture, and fixtures. If the franchisee defaults on their obligations under the Subfranchise Rights Agreement, Anago can claim these assets to cover the outstanding debt. Therefore, franchisees should be aware of the implications of granting this security interest and understand their obligations under the agreement to avoid potential default and loss of assets.