What does the Big Apple Bagels Security Agreement authorize the Secured Party to file?

According to Big Apple Bagels' 2025 Franchise Disclosure Document, the Security Agreement authorizes the Secured Party (BAB Systems, Inc.) to file Uniform Commercial Code (UCC) Financing Statements. This authorization enables Big Apple Bagels to perfect its security interest by filing these statements in the state where the franchisee's Big Apple Bagels stores are located. The franchisee, as the Debtor, waives any requirement for their own execution of these UCC Financing Statements.

In simpler terms, this means that as part of the Security Agreement, a Big Apple Bagels franchisee gives the franchisor the right to file documents that establish the franchisor's claim on the franchisee's assets used as collateral. This is a standard practice in franchising to protect the franchisor's financial interests in case the franchisee defaults on their obligations.

The Security Agreement also grants Big Apple Bagels the right to obtain a credit report on the franchisee if the franchisee defaults under the Franchise Agreement. This includes situations such as delinquency in payments, dishonored bank drafts, cancellation of insurance for non-payment, or nonpayment to vendors or the landlord. This allows Big Apple Bagels to monitor the franchisee's financial standing and assess the risk of further defaults.

Upon default, Big Apple Bagels has all rights available to it under the Commercial Code of the state where the Big Apple Bagels stores are located. The agreement specifies that the collateral is used for business purposes, not personal, family, or household purposes. This is a standard clause clarifying the nature of the secured assets and ensuring the agreement falls under commercial law.