What right does a Bath Tune Up franchisee waive when obtaining financing?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
standards, we will, at your request, provide financing as shown below.
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.
Key terms are as follows:
| OBLIGATION | SECTION IN FRANCHISE AGREEMENT | DISCLOSURE DOCUMENT ITEM |
|---|---|---|
| u. Renewal | Section 5 | Item 17 |
| v. Post-termination obligations | Section 12 | Item 17 |
| w. |
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 who obtains financing from the franchisor waives specific rights. To secure financing, the franchisee must sign a Secured Promissory Note and General Security Agreement.
As part of this agreement, the franchisee waives their right to receive notice of any collection action initiated by Bath Tune Up and also waives the right to assert any defenses against collection efforts. This means that if Bath Tune Up pursues collection on the promissory note, the franchisee cannot claim they were not informed in advance or raise defenses they might otherwise have.
Additionally, the FDD states that Bath Tune Up has the right to sell the franchisee's promissory note to a third party at a discounted rate. If this occurs, the third party may be immune to any defenses the franchisee could have raised against Bath Tune Up, further limiting the franchisee's legal recourse. This is a significant consideration for prospective franchisees, as it could impact their ability to resolve disputes related to the financing agreement.