Does the Benjamin Franklin Plumbing security agreement extend to after-acquired property of the Debtor?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
erial 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. As security for: (i) Debtor's timely and complete payment of all amounts owing under the Note, the Franchise Agreement, and of any other debts Debtor owes to Secured Party; and (ii) Debtor's performance of all of the covenants, obligations and agreements contained in the Note, the Franchise Agreement, this Agreement and all other instruments and documents pertaining to, evidencing or securing the Note, the Franchise Agreement or other debts Debtor owes to Secured Party (and as those instruments and documents may be amended from time to time), Debtor hereby grants, transfers, and assigns to Secured Party a continuing security interest in the following items, property and rights (collectively, "Collateral"): A. All of the personal property of Debtor now and hereafter situated at, used in connection with, relating to or deriving from any BENJAMIN FRANKLIN PLUMBING Franchised Business (or its successor) pursuant to the Franchise Agreement or otherwise, including without limitation, at those certain premises which are described on Exhibit A, attached hereto and incorporated herein by this reference ("Premises"), and the businesses conducted at such Premises, including, without limitation, all present and after-acquired goods, accounts, documents, instruments, money, deposit accounts, chattel paper, inventory, 1 of all liens except the lien created hereby. Debtor agrees that it: (a) will properly maintain, repair and
- Warranties; Protection of Collateral. Debtor warrants that it is the owner of the Collateral free
equipment, supporting obligations, investment property, letter of credit rights, and general intangibles; and
and (or) additions to or of those items referred to in subparagraph 2.A.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 Benjamin Franklin Plumbing Franchise Disclosure Document, the security agreement does extend to after-acquired property of the debtor. The Debtor grants a continuing security interest to the Secured Party in all personal property now and hereafter situated at, used in connection with, relating to, or deriving from any Benjamin Franklin Plumbing Franchised Business. This includes all present and after-acquired goods, accounts, documents, instruments, money, deposit accounts, chattel paper, inventory, equipment, supporting obligations, investment property, letter of credit rights, and general intangibles.
This means that any property the Benjamin Franklin Plumbing franchisee acquires after the security agreement is signed, which falls into the categories listed, will also be subject to the security interest. This collateral secures the franchisee's obligations under the Note, the Franchise Agreement, and any other debts owed to the Secured Party. The security interest extends to replacements, rents, profits, substitutions and/or additions to these items, as well as any proceeds from their sale or disposition, including insurance payouts.
For a prospective Benjamin Franklin Plumbing franchisee, this implies that the security interest is not limited to the assets owned at the start of the franchise but also covers assets acquired during the franchise term. This could impact the franchisee's ability to obtain additional financing, as these after-acquired assets are already pledged as collateral to Benjamin Franklin Franchising SPE LLC. The franchisee warrants that it owns the collateral free of all liens except the one created by the security agreement.