Does the collateral for Bath Tune Up include all present and future contract rights?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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,
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 all present and future contract rights. This means that any contracts the franchisee enters into, both now and in the future, can be used as collateral. This also extends to general intangibles, encompassing items like tax refunds, patents, trademarks, copyrights, trade secrets, customer lists, and existing and future leasehold interests.
This broad definition of collateral has significant implications for a prospective Bath Tune Up franchisee. In the event of a loan default, the lender could potentially seize not only physical assets but also the rights to contracts, intellectual property, and other intangible assets. This could severely impact the franchisee's ability to operate the business and recover from financial difficulties.
It is important for a prospective Bath Tune Up franchisee to fully understand the implications of pledging such a wide range of assets as collateral. They should carefully review the loan agreement and seek legal counsel to assess the risks involved. Understanding the full scope of the collateral and the potential consequences of default is crucial for making an informed decision about investing in a Bath Tune Up franchise.