What can the Secured Party declare regarding the Note in the event of a Benjamin Franklin Plumbing default?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
4. Default.
- A. Any of the following events shall constitute an event of default ("Default"):
- (i) Maker fails to pay any principal of or, if applicable, interest on this Note when the same shall become due, either by the terms hereof or by acceleration or otherwise; or
- (ii) Maker or its affiliates or subsidiaries default on any agreement with Holder, or its affiliates or subsidiaries, including the Franchise Agreement.
- B. Upon the occurrence of any Default, Holder may, at its option and in addition to any right, power or remedy permitted by law or equity, by written notice to Maker, declare the unpaid Principal Amount of this Note to be and the same shall thereupon be and become, forthwith due and payable in its entirety, together with, if applicable, accrued interest on that amount. A Default under this Note shall also constitute a Default under the Franchise Agreement. No waiver by Holder of any Default shall operate as a waiver of any other default or the same default on a future occasion.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, if a default event occurs, the Holder has the option to declare the unpaid Principal Amount of the Promissory Note to be immediately due and payable, along with any accrued interest. A default under the Note also constitutes a default under the Franchise Agreement. The Holder is Benjamin Franklin Franchising SPE LLC. The Maker is the franchisee.
Specifically, a default event includes failing to pay the principal or interest on the Note when due, or defaulting on any agreement with the Holder, its affiliates, or subsidiaries, including the Franchise Agreement. The Holder is not obligated to provide any waiver for any default, which means that any previous forbearance does not prevent them from enforcing the terms in the future.
This clause in the security agreement is significant for a prospective Benjamin Franklin Plumbing franchisee because it outlines the circumstances under which the franchisor can demand immediate payment of the outstanding loan balance. It also links the loan agreement to the franchise agreement, meaning a default on one triggers a default on the other. This could lead to the termination of the franchise agreement and the loss of the franchise.