For Bath Tune Up, what is the Pledgor required to do with chattel paper and instruments they own or acquire?
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)
Based on the 2025 Franchise Disclosure Document, Bath Tune Up's Item 22 discusses contracts related to the franchise agreement. It states that all present and future chattel paper, documents, and instruments are included as part of the collateral. However, the document does not specify any particular actions or requirements that the Pledgor (likely the franchisee) must take regarding the chattel paper and instruments they own or acquire. The document only lists chattel paper, documents, and instruments as part of the collateral.
Because the FDD excerpt identifies chattel paper and instruments as collateral, a prospective Bath Tune Up franchisee should understand that these items are subject to the security interests of the franchisor. This means that Bath Tune Up could have a claim against these assets in the event of a default or breach of contract by the franchisee.
To fully understand the franchisee's obligations regarding chattel paper and instruments, a prospective franchisee should ask Bath Tune Up for clarification on the specific requirements for managing, maintaining, or transferring these documents. This includes understanding any restrictions on their use or disposal and the process for releasing them from the collateral agreement once the obligations to the franchisor are satisfied. Without this information, the franchisee may be at risk of inadvertently violating the terms of the franchise agreement.