What assets are generally required as security for 'Other Financing' obtained through Big O Tires?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 15: Other Financing: Documentation Required: Generally Promissory Note, Exhibit G and Security Agreement, Exhibit H. On occasion, we sell the notes receivable we receive from our franchisees to third party lenders. In that event, the Franchisees may need to make payment directly to the third party lender. We reserve the right to continue to occasionally do so in the future in our discretion. We may remain primarily liable to provide all services, if any, due to you under the notes receivable from you, and the third party who may acquire these notes may be immune under the law to any defenses to payment you may have against us. Also, the Security Agreement in Exhibit H provides that, if we transfer our rights under the Security Agreement to a third party, in any litigation brought by the third party to recover sums due or recover collateral under the Security Agreement, you may not assert against that third party any defenses or claims you may have against us.
Source: Item 10 — FINANCING (FDD pages 48–55)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the specific assets required as security for 'Other Financing' are not explicitly detailed. However, the FDD does mention the documentation generally required for 'Other Financing'.
Note 15 in Item 10 states that the documentation typically includes a Promissory Note (Exhibit G) and a Security Agreement (Exhibit H). The Security Agreement outlines the collateral that Big O Tires can take possession of upon default. The FDD also indicates that Big O Tires may sell the notes receivable to third-party lenders, which could affect the franchisee's payment obligations and rights.
For the Alternative Financing Option for the Additional Store Incentive Program and Multi-Store Conversion Program, the security required includes accounts receivable, inventory, equipment, fixtures, intangibles, and other assets of the store, as well as personal guarantees from the owners and others. This financing option is available to franchisees who are financially qualified and participate in either the Additional Store Incentive Program or the Multi-Store Conversion Program, electing this option instead of other available incentives. Prospective franchisees should carefully review Exhibits G and H and consult with Big O Tires to fully understand the security requirements for any financing they may obtain.