What security is required for all Notes from Better Homes And Gardens Real Estate?
Better_Homes_And_Gardens_Real_Estate Franchise · 2025 FDDAnswer from 2025 FDD Document
- [5] All Notes must be guaranteed by the Franchisee as well as personally guaranteed by all shareholders, partners, interest holders and their respective spouses, as required by us.
You must sign a Security Agreement at the time you sign the Franchise Agreement for all the Business' assets, including after acquired property, and we will file a UCC-1 financing statement for the Business' assets with the appropriate state government authority. (See Exhibit E to the Franchise Agreement or Exhibit D-3.) We have the right to require additional forms of security.
Source: Item 10 — FINANCING (FDD pages 44–47)
What This Means (2025 FDD)
According to Better Homes And Gardens Real Estate's 2025 Franchise Disclosure Document, all Notes must be guaranteed by the franchisee and personally guaranteed by all shareholders, partners, interest holders, and their respective spouses. Additionally, franchisees must sign a Security Agreement for all of the business's assets, including any assets acquired after the agreement is signed. Better Homes And Gardens Real Estate will also file a UCC-1 financing statement for the business's assets with the appropriate state government authority. Better Homes And Gardens Real Estate retains the right to require additional forms of security.
This means that if a franchisee takes out a loan from Better Homes And Gardens Real Estate, the franchisor requires multiple layers of security to ensure repayment. This includes personal guarantees from anyone with a significant financial stake in the franchise, as well as a claim on all of the business's assets. The UCC-1 filing puts other creditors on notice that Better Homes And Gardens Real Estate has a secured interest in those assets.
The fact that Better Homes And Gardens Real Estate can require additional forms of security provides them with flexibility but also introduces some uncertainty for the franchisee. A prospective franchisee should clarify what additional forms of security might be required and under what circumstances. This level of security is not uncommon in franchising, especially when the franchisor is providing financing directly to the franchisee, as it mitigates the franchisor's risk.