Under what condition can the Secured Party act as Bath Tune Up's attorney-in-fact?
Bath_Tune_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) at any time to
- (i) take control in any manner of any item of payment or proceeds thereof,
- (ii) have access to any lockbox or postal box into which Pledgor's mail is deposited,
- (iii) endorse Pledgor's name upon any items of payment or proceeds thereof and deposit the same in the Secured Party's account for application to the Obligations,
- (iv) endorse Pledgor's name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Account or any goods pertaining thereto or any other Collateral, and
- (v) sign Pledgor's name on any verification of Accounts and notices thereof to account debtors and
- (vi) execute in Pledgor's name and file any UCC financing statements or amendments thereto. Pledgor hereby releases Secured Party and its officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Secured Party's own gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2025 FDD)
According to the 2025 Bath Tune Up Franchise Disclosure Document, the Secured Party can act as the Pledgor's (Franchisee) attorney-in-fact under specific conditions related to payments and proceeds. The Secured Party has the power to take control of payments, access lockboxes, endorse payments, and sign documents on behalf of the Pledgor. This includes endorsing the Pledgor's name on payment items, chattel paper, invoices, and verifying accounts. The Secured Party can also execute and file UCC financing statements or amendments in the Pledgor's name.
This power of attorney grants significant authority to the Secured Party, allowing them to manage financial aspects of the Pledgor's business in certain situations. However, the Pledgor (Franchisee) releases the Secured Party from liabilities arising from these actions, except in cases of the Secured Party's gross negligence or willful misconduct, as determined by a court order. This provision aims to protect the Secured Party while ensuring they are accountable for their actions.
This arrangement is designed to protect the Secured Party's interests by allowing them to take necessary actions to secure their investment and manage financial obligations. For a prospective Bath Tune Up franchisee, this means understanding the extent of the Secured Party's authority and the conditions under which they can act on the franchisee's behalf. It also highlights the importance of maintaining a strong financial position to avoid triggering these powers.