Does Anago warrant that there are no existing Financing Statements on file covering the Collateral?
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)
Based on the 2025 FDD, there is no explicit statement from Anago warranting that there are no existing financing statements on file covering the collateral. However, the franchise agreement does state that the franchisee grants Anago a "first priority security interest" in the Debtor's Business Assets (the "Collateral").
This "first priority security interest" suggests that Anago intends to have the primary claim on the franchisee's business assets in the event of default. However, it does not guarantee that there are no other existing claims or liens on those assets. A prospective franchisee should conduct their own due diligence, including a thorough search of UCC filings, to verify the absence of prior claims.
It is important for a potential Anago franchisee to seek legal counsel to fully understand the implications of the security interest and to ensure that their interests are protected. Specifically, they should clarify whether Anago is responsible for ensuring the first priority of its security interest and what recourse the franchisee has if prior claims are discovered.