What is the security interest granted by the Big Apple Bagels franchisee intended to secure?
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, the security interest granted by the franchisee (Debtor) to BAB Systems, Inc. (Secured Party) is intended to secure the franchisee's ongoing monetary and non-monetary obligations to Big Apple Bagels as the franchisor, pursuant to the Franchise Agreement. This is explicitly stated in Recital A of the Security Agreement. The franchisee operates Big Apple Bagels stores under the Franchise Agreement and has obligations to the franchisor.
The collateral for this security interest includes all property located at or relating to the Big Apple Bagels stores. This encompasses a wide range of assets, such as all equipment, furniture, fixtures, inventory, personal property, supplies, general intangibles, accounts receivable, accounts, contract rights, chattel paper, and instruments, whether currently owned or acquired in the future. It also includes any additions, accessions, proceeds, and products derived from these assets.
In essence, Big Apple Bagels requires a security interest in virtually all of the franchisee's business assets to ensure that the franchisee fulfills their financial and operational responsibilities as outlined in the Franchise Agreement. This is a common practice in franchising, providing the franchisor with a legal claim on the franchisee's assets in case of default or non-compliance. Prospective franchisees should carefully review the Franchise Agreement and Security Agreement to fully understand the scope of the collateral and the obligations they are securing.