Under what circumstances related to collateral maintenance and protection is a Bb.Q Chicken franchisee responsible for reimbursing sums expended or advanced by Bb.Q Chicken, including rent, taxes, insurance, and lien discharge?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
21.6 Security Agreement
To secure payment of all sums owing to Franchisor from Franchisee, whether they be Royalty Fees, Brand Development Fee, and/or other fees, costs, damages, or reimbursements pursuant to this Agreement or any other agreement between Franchisor and Franchisee and/or Principal(s), Franchisee grants Franchisor a security interest in the Collateral (as hereafter defined) and further agrees:
- 21.6.1 The Collateral means all furniture, fixtures, equipment, signage, inventory, and supplies of the Franchised Business, wherever located, that are now owned or hereafter acquired, and any additions, substitutions, replacements, or products thereof or proceeds therefor.
- 21.6.2 This Agreement shall be deemed a security agreement, and Franchisor, in Franchisor's discretion, may file with applicable state agencies or offices this Agreement and/or one or more financing statements indicating Franchisor's secured interest in the Collateral. Franchisee shall cooperate with Franchisor and shall execute such documents as may be necessary for Franchisor to perfect its security interests.
- 21.6.3 Upon a default of this Agreement by Franchisee, all sums owing to Franchisor from Franchisee shall be immediately due and payable, and Franchisor shall have the immediate right to possession and use of the Collateral, which includes Franchisor right to enter upon any premises, without legal process, where the Collateral may be found. Franchisor further shall have all rights, options, duties,
and remedies of a secured party pursuant to the Uniform Commercial Code, as adopted by the State where the Collateral is located, including the right to dispose of the Collateral in accordance therewith.
21.6.4 Franchisor's exercise of its rights with regard to the Collateral are in addition to and not exclusive of any other rights or remedies that Franchisor may have pursuant to this Agreement, at law, or in equity for Franchisee's breach of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 62–283)
What This Means (2025 FDD)
The 2025 FDD for Bb.Q Chicken outlines the franchisee's responsibilities regarding security interests and collateral. To secure payments owed to Bb.Q Chicken, including Royalty Fees, Brand Development Fees, or other costs, the franchisee grants Bb.Q Chicken a security interest in the collateral. This collateral encompasses all furniture, fixtures, equipment, signage, inventory, and supplies of the franchised business, regardless of location, whether currently owned or acquired in the future.
Bb.Q Chicken, at its discretion, may file financing statements with state agencies to indicate its secured interest in the collateral, and the franchisee is obligated to cooperate and execute necessary documents to perfect these security interests. Upon a default by the franchisee, all outstanding sums become immediately due, and Bb.Q Chicken has the right to immediate possession and use of the collateral, including the right to enter the premises where the collateral is located without legal process.
Bb.Q Chicken retains all rights and remedies of a secured party under the Uniform Commercial Code, including the right to dispose of the collateral. Exercising these rights regarding the collateral does not exclude any other legal or equitable remedies available to Bb.Q Chicken for the franchisee's breach of the agreement. This comprehensive security agreement ensures Bb.Q Chicken can recover outstanding debts in case of franchisee default, protecting its financial interests in the franchise operation.