Does the collateral for Bath Tune Up include insurance proceeds from loss or damage to equipment?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) all Accounts.
- (b) all present and future contract rights, general intangibles (including tax and duty refunds, registered and unregistered patents, franchises, licenses, trademarks, service marks, copyrights, trade names, applications for the foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer lists, licenses, whether as franchisor or franchisee, choses in action and other claims and existing and future leasehold interests in equipment, real estate and fixtures), chattel paper, documents, instruments, letters of credit, bankers' acceptances and guaranties,
- (c) all present and future monies, securities, credit balances, deposits, deposit accounts and other property of Pledgor now or hereafter held or received by or in transit to any depository or other institution from or for the account of Pledgor whether for safekeeping, pledge, custody, transmission, collection or otherwise, and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Accounts and other Collateral, including:
- (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral,
- (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party,
- (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Accounts or other Collateral, including returned, repossessed and reclaimed goods, and
- (iv) deposits by and property of account debtors or other persons securing the obligations of account debtors.
- (d) all Inventory,
- (e) all Equipment,
- (f) all Records, and
- (g) all products and proceeds of the foregoing, in any form, including insurance proceeds and any claims against third parties for loss or damage to or destruction of any or all of the foregoing.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, the collateral includes insurance proceeds from loss or damage to equipment. Specifically, all products and proceeds from accounts, contract rights, general intangibles, inventory, equipment, and records are considered collateral. This explicitly includes insurance proceeds and any claims against third parties for loss or damage to or destruction of any or all of the aforementioned assets.
This means that if a Bath Tune Up franchisee experiences a loss or damage to their equipment, any insurance money they receive as a result would be considered collateral by the franchisor. Bath Tune Up, as the secured party, has rights to these proceeds.
Bath Tune Up also has the option to apply any insurance proceeds received to the cost of repairs or replacement of collateral, or to payment of the obligations, regardless of whether they are due. They can also hold such proceeds as cash collateral for the obligations. This gives Bath Tune Up significant control over how insurance proceeds are used in the event of a loss, which may impact a franchisee's ability to quickly recover and resume operations.