Can a Bath Tune Up franchisee prepay the Secured Promissory Note?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
To obtain financing, you must sign a Secured Promissory Note and General Security Agreement substantially in the form of Exhibits J and K to this disclosure document. No separate personal guaranty is required to obtain financing. Payments begin with the first royalty due date. The note can be prepaid without penalty at any time during its term. The General Security Agreement grants us a security interest in substantially all of your assets to secure your payments under the Secured Promissory Note. You waive your right to notice of a collection action and to assert any defenses to collection against us.
Source: Item 10 — FINANCING (FDD pages 26–27)
What This Means (2025 FDD)
According to Bath Tune Up's 2025 Franchise Disclosure Document, a franchisee can prepay the Secured Promissory Note without incurring any penalties. This provides financial flexibility, allowing franchisees to manage their debt obligations in a way that best suits their financial situation.
This ability to prepay the note without penalty is a significant benefit for Bath Tune Up franchisees. It means that if a franchisee's business performs well and they have excess cash, they can reduce their debt and interest expenses. This can improve their overall profitability and financial stability.
However, the General Security Agreement grants Bath Tune Up a security interest in substantially all of the franchisee's assets to secure payments under the Secured Promissory Note. Additionally, the franchisee waives their right to notice of a collection action and to assert any defenses against Bath Tune Up. While Bath Tune Up has never done so, they retain the right to sell the promissory note at a discount to a third party, which may be immune to any defenses the franchisee has against Bath Tune Up. Prospective franchisees should carefully consider these factors and seek legal counsel to fully understand the implications of the Secured Promissory Note and General Security Agreement.