Are cross-collateralization clauses on other loans effective as to this Loan for Beverly Anns Cookie?

According to the 2025 Beverly Anns Cookie Franchise Disclosure Document, cross-collateralization clauses on other loans are not effective as to this loan. Specifically, the FDD states that any cross-collateralization clause on any existing or future loan, excluding the current loan, is considered void and ineffective. This protection extends to any extensions or refinancing of the current loan as well.

This provision protects Beverly Anns Cookie franchisees by ensuring that the assets secured under the current loan agreement are not subject to claims from other loan agreements. In simpler terms, if a franchisee has other loans, those lenders cannot claim the assets secured under this specific Beverly Anns Cookie franchise loan in case of default on those other loans. This limitation on cross-collateralization provides a degree of financial security and clarity for the franchisee.

This type of clause is beneficial for franchisees as it ring-fences the assets associated with the Beverly Anns Cookie franchise from other financial obligations. Franchisees should still carefully review all loan documents to fully understand the terms and conditions, but this clause offers a significant protection against the risk of losing franchise-related assets due to unrelated loan defaults.