Is the Secured Party obligated to collect payment of any accounts for Bath Tune Up?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Secured Party may, at any time or times that an Event of Default exists or has occurred and is continuing,
- (i) notify any or all account debtors that the Accounts have been assigned to Secured Party and that Secured Party has a security interest therein and Secured Party may direct any or all accounts debtors to make payment of Accounts directly to Secured Party,
- (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Accounts or other obligations included in the Collateral and thereby discharge or release the account debtor or any other party or parties in any way liable for payment thereof without affecting any of the Obligations,
- (iii) demand, collect or enforce payment of any Accounts or such other obligations, but without any duty to do so, and Secured Party shall not be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and
- (iv) take whatever other action Secured Party may deem necessary or desirable for the protection of its interests. At any time that an Event of Default exists or has occurred and is continuing, at Secured Party's request, all invoices and statements sent to any account debtor shall state that the Accounts and such other obligations have been assigned to Secured Party and are payable directly and only to Secured Party and Pledgor shall deliver to Secured Party such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Secured Party may require.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up FDD, the Secured Party does not have a duty to collect or enforce payment of any accounts. However, if an Event of Default exists or has occurred and is continuing, the Secured Party has the right to demand, collect, or enforce payment of any accounts or such other obligations, but without any duty to do so. Bath Tune Up franchisees should note that the Secured Party will not be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto.
Furthermore, the Secured Party has the right to take certain actions regarding the accounts. This includes notifying account debtors that the accounts have been assigned to the Secured Party and directing them to make payments directly to the Secured Party. The Secured Party can also extend payment times, compromise, settle, or adjust accounts for cash, credit, or return of merchandise.
These rights are only exercisable if an Event of Default exists or has occurred and is continuing. Additionally, at the Secured Party's request during such an event, all invoices and statements sent to account debtors must state that the accounts have been assigned to the Secured Party and are payable directly and only to them. The franchisee must also deliver originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any accounts as the Secured Party may require.