What does the General Security Agreement grant to Bath Tune Up?
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, if a franchisee seeks financing from the franchisor, they must sign a General Security Agreement. This agreement grants Bath Tune Up a security interest in substantially all of the franchisee's assets. This serves as collateral to secure the franchisee's payment obligations under the Secured Promissory Note.
In practical terms, this means that if a Bath Tune Up franchisee defaults on their loan payments to the franchisor, Bath Tune Up has the legal right to seize and liquidate the franchisee's assets to recover the outstanding debt. The scope of "substantially all" assets is broad and could include business equipment, inventory, accounts receivable, and potentially even personal assets depending on the specific terms outlined in the agreement.
Furthermore, the franchisee waives their right to receive notice of any collection action and also waives the right to assert any defenses against Bath Tune Up during collection. This is a significant point, as it limits the franchisee's ability to challenge or delay collection efforts in the event of a dispute. Prospective franchisees should carefully review the General Security Agreement (Exhibit K) with a legal advisor to fully understand the implications of these waivers and the extent of the assets that are subject to the security interest.