What is the Big Apple Bagels franchisee required to execute regarding the security interest?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
| This Security Agreement dated is by and between | ||
|---|---|---|
| BAB Systems, Inc., an Illinois corporation, of 500 Lake Cook Road, Suite 475, Deerfield, Illinois | ||
| 60015 | ("Secured Party") and | |
| , whose principal place of business is ("Debtor"). RECITALS | ||
| A. | Debtor is a franchisee under a Franchise Agreement dated ("Franchise Agreement") with Secured Party as Franchisor, pursuant to which Franchise Agreement Debtor has ongoing monetary and non-monetary obligations to Secured Party. | |
| B. | Debtor has locations at which Debtor operates businesses known as "Big Apple Bagels" ("BAGELS Stores"), pursuant to the Franchise Agreement; the addresses of the locations are listed on Schedule "A" attached hereto and incorporated herein by reference. | |
| C. | Debtor is giving Secured Party a security interest in the collateral described in this | |
| Agreement. | NOW THEREFORE, in consideration of the several and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: | |
| 1. | The Recitals set forth above shall be incorporated into this part of the Agreement as though they were fully set forth herein. | |
| 2. | Description of Collateral: the following property located at or relating to the BAGELS Stores noted on Schedule A: all equipment, furniture, fixtures, inventory, personal property, supplies, general intangibles, accounts receivable, accounts, contract rights, chattel paper and instruments, now owned or hereafter acquired by the Debtor, and all additions and accessions to, and all proceeds and products of the foregoing ("Collateral"). | |
| 3. | Debtor hereby grants to Secured Party a security interest in the Collateral described in |
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, a franchisee (referred to as 'Debtor') is required to grant a security interest to BAB Systems, Inc. (referred to as 'Secured Party') in specific collateral related to their Big Apple Bagels stores. This obligation arises from the Franchise Agreement between the franchisee and Big Apple Bagels, where the franchisee has ongoing monetary and non-monetary obligations to the company. The security interest ensures that Big Apple Bagels has a claim on the franchisee's assets if the franchisee fails to meet their obligations under the Franchise Agreement.
The collateral subject to the security interest includes all equipment, furniture, fixtures, inventory, personal property, supplies, general intangibles, accounts receivable, accounts, contract rights, chattel paper, and instruments located at or related to the Big Apple Bagels stores. This also extends to any additions, accessions, proceeds, and products of these items. The specific locations of the Big Apple Bagels stores covered by this agreement are listed on Schedule 'A' of the Security Agreement.
In practical terms, this means that if a Big Apple Bagels franchisee defaults on their financial or contractual obligations to the company, Big Apple Bagels has the right to seize and liquidate the assets listed as collateral to recover the debt. This is a common practice in franchising to protect the franchisor's interests and ensure compliance with the Franchise Agreement. Prospective franchisees should carefully review the Security Agreement and understand the implications of granting a security interest in their business assets.