What security is required by Osgood Bank for Beverly Anns Cookie franchise financing?
Beverly_Anns_Cookie Franchise · 2025 FDDAnswer from 2025 FDD Document
Osgood Bank may offer you Financing for the purchase of your GRM/GRT and initial inventory and equipment. You will be required to enter into a promissory note, guaranty, security agreement ("Promissory Note and Security Agreement") attached in Exhibit H to this Franchise Disclosure Document. The following table summarizes the Financing Osgood Bank may offer you:
SUMMARY OF OSGOOD BANK FINANCING OFFERED(1)
-
- If your franchisee entity is a partnership, corporation, or other recognized legal entity, the Loan and Security Agreement must be guaranteed individually by all partners or shareholders. The Loan and Security Agreement must be secured by the assets of the Beverly Ann's Franchise.
-
- If you are late on your payments, Auxilior Capital Partners can charge a late penalty. In the case of nonpayment or other default under the Loan and Security Agreement, Auxilior Capital Partners can require immediate payment of all amounts due them and can collect reasonable attorney fees and all costs and expenses of collection.
-
- The Loan and Security Agreement requires that you waive trial by jury and the right to interpose any defense, set-off, or counterclaim of any nature or description. Arbitration or trial by judge will take place on an individual basis without any form of class action. Auxilior is not liable for specific performance for any loss, damages, delay or failure to deliver equipment.
Source: Item 10 — FINANCING (FDD pages 33–37)
What This Means (2025 FDD)
According to Beverly Anns Cookie's 2025 Franchise Disclosure Document, if a franchisee obtains financing through Osgood Bank, the required security depends on the franchisee's business structure. Specifically, if the franchisee entity is a partnership, corporation, or other recognized legal entity, the Loan and Security Agreement must be guaranteed individually by all partners or shareholders. Additionally, the Loan and Security Agreement must be secured by the assets of the Beverly Ann's Cookie franchise itself. This means that Osgood Bank will have a claim on the franchise's assets in case of default.
This requirement has significant implications for prospective franchisees. It means that not only is the franchise itself at risk if the loan is not repaid, but also the personal assets of the partners or shareholders providing the guarantee. This is a standard practice in franchising, as it provides the lender with additional security and reduces their risk. However, it also increases the risk for the franchisee, as their personal assets could be at stake.
Furthermore, the agreement stipulates that the franchisee waives their right to a trial by jury and the ability to raise any defenses, set-offs, or counterclaims. This is a significant legal concession that could limit the franchisee's options in the event of a dispute with Osgood Bank. Prospective franchisees should carefully consider these terms and seek legal advice before entering into a financing agreement with Osgood Bank to fully understand the risks and obligations involved.