In the Benjamin Franklin Plumbing franchise agreement, what is the role of the entity referred to as 'Debtor'?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
SECURITY AGREEMENT
__________________________, by and between , a __________formed in
THIS SECURITY AGREEMENT ("Agreement") is made and entered into as of
("Debtor"), and Benjamin Franklin Franchising SPE LLC, a Delaware limited liability company ("Secured Party"), who agree as follows: 1.
Recitals.
This Agreement is made and entered into with reference to the following facts and circumstances: A.
Debtor and Secured Party entered into a BENJAMIN FRANKLIN PLUMBING franchise agreement ("Franchise Agreement") under which Debtor was required to pay Secured Party a "Franchise Fee"; B.
Debtor and Secured Party entered into a Promissory Note ("Note") on the same date as this Security Agreement ("Agreement") under which Secured Party agreed to permit Debtor to pay a portion of the Franchise Fee on a payment plan; C.
Debtor is jointly and severally indebted to Secured Party in the principal amount of $ as evidenced by the Note (the "Indebtedness"); and D.
As a material inducement for Secured Party's accepting the Note, Debtor has agreed to secure Debtor's performance under the provisions and conditions of the Note, the Franchise Agreement, and any other debts Debtor owes to Secured Party by granting to Secured Party a security interest in the collateral described in this Agreement. 2.
Grant of Security Interest.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, the 'Debtor' in the security agreement is the franchisee who owes money to Benjamin Franklin Franchising SPE LLC, the 'Secured Party'. The Debtor's obligations arise from a Promissory Note related to the franchise fee and the Franchise Agreement itself. The Debtor is essentially using their business assets as collateral to secure their debt. This arrangement allows the franchisee to pay the franchise fee over time, as opposed to a lump sum.
Specifically, the Debtor grants a security interest in all personal property related to the Benjamin Franklin Plumbing franchise. This includes items at the franchised business location, such as equipment, inventory, accounts, and other assets. The Debtor also provides rights to replacements, rents, profits, and proceeds from the sale of these assets. This collateral ensures that Benjamin Franklin Franchising SPE LLC has a financial recourse if the franchisee fails to meet their payment obligations under the Promissory Note or the Franchise Agreement.
The Debtor warrants that they own the collateral free of other liens, except for the lien created by the security agreement. The Debtor is responsible for maintaining and repairing the collateral. This arrangement is documented in a Security Agreement, which outlines the terms and conditions of the security interest. Prospective franchisees should carefully review this agreement to understand their obligations and the potential consequences of default.