What constitutes a default by a Benjamin Franklin Plumbing debtor if they become insolvent?

According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, a debtor is considered in default if they experience insolvency, bankruptcy, a business failure, make an assignment for the benefit of creditors, or have a receiver appointed for their business or property. This definition is outlined within the Security Agreement that franchisees enter into with Benjamin Franklin Franchising SPE LLC.

For a prospective Benjamin Franklin Plumbing franchisee, this means that any of these financial distress events could trigger a default under the Security Agreement. If a franchisee defaults, Benjamin Franklin Plumbing has specific rights and remedies. These include taking possession of the collateral, which comprises all personal property used in connection with the Benjamin Franklin Plumbing franchised business, and potentially operating the business for the debtor's account or disposing of the collateral through a public or private sale.

This clause is significant because it allows Benjamin Franklin Plumbing to protect its interests in the event of a franchisee's financial instability. It's a fairly standard provision in franchise agreements, as franchisors need to have mechanisms in place to recover outstanding debts and maintain the integrity of the brand. Franchisees should be aware of these conditions and carefully consider their financial planning and risk management strategies to avoid such default scenarios.

The Security Agreement also states that Benjamin Franklin Plumbing can deem itself insecure and consider it a default if they believe in good faith that the prospect of payment of the debt or performance of the agreement is impaired. This clause provides an additional layer of protection for Benjamin Franklin Plumbing, allowing them to act proactively if they perceive a significant risk to their financial interests.