What document governs the Secured Promissory Note for Bath Tune Up franchisees?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
acquiescence in any default, nor shall any single or partial exercise by Secured Party of any right or remedy preclude any other right or remedy. Secured Party, at its option, may enforce its rights against any collateral securing this Note without enforcing its rights against Obligor, any guarantor of the indebtedness evidenced hereby or any other property or indebtedness due or to become due to Obligor. Obligor agrees that, without releasing or impairing Obligor's liability hereunder, Secured Party may at any time release, surrender, substitute or exchange any collateral securing this Note and may at any time release any party primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of South Dakota, except that for purposes of the usury laws (and determining the maximum rate of interest allowable), this Note shall be governed by and construed and enforced in accordance with the laws of the state of Obligor's residence.
IN WITNESS WHEREOF, Obligor has caused this Note to be duly executed and delivered in Aberdeen, South Dakota, on the date first above written.
| | 12/31/2024 | 12/31/2023 | |---|---|---| | Accrued cost of sales $ 339,593 $ 328,125 | | | | Accrued compensation 116,571 118,990 | | | | Accrued training costs 15,653 24,892 | | | | Accrued accounts payable 3,779 42,060 | | | | Other 767 399 | | | | Accrued liabilities $ 476,363 $ 514,466 | | |
EXHIBIT M
STATE EFFECTIVE DATES
The following states have franchise laws that require that the Franchise Disclosure Document be registered or filed with the state, or be exempt from registration: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington and Wisconsin.
This document is effective and may be used in the following states, where the document is filed, registered or exempt from registration, as of the Effective Date stated below:
| Assets | | |---|---| | Current assets | | | Cash ($395,843 restricted) | $ 1,662,336 | Other states may require registration, filing, or exemption of a franchise under other laws, such as those that regulate the offer and sale of business opportunities or seller-assisted marketing plans.
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Source: Item 23 — RECEIPTS (FDD pages 52–222)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up FDD, the Secured Promissory Note is governed by the laws of the State of South Dakota, with a specific exception. While South Dakota law generally applies, the usury laws (and the determination of the maximum allowable interest rate) are governed by the laws of the state where the franchisee (Obligor) resides. This means that while the overall agreement is based in South Dakota, the interest rate charged must comply with the usury laws of the franchisee's home state.
This is important for prospective Bath Tune Up franchisees because it ensures that the interest rate on the Secured Promissory Note complies with the legal limits of their state of residence, protecting them from potentially excessive interest charges. Franchisees should be aware of the usury laws in their state and ensure that the interest rate on the note adheres to those regulations.
Furthermore, the FDD states that the Obligor waives certain rights related to the note, including presentment, demand, protest, and notice of dishonor, to the fullest extent permitted by applicable law. This means the franchisee gives up some legal protections they might otherwise have, making it crucial to fully understand the terms of the Secured Promissory Note and seek legal counsel if needed. The FDD also indicates that the Secured Party (likely Bath Tune Up or a related entity) can enforce its rights against any collateral securing the note without first pursuing the franchisee or any guarantor.