What are the consequences of defaulting on a promissory note with Big O Tires?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 8: General Default Terms: The standard promissory note in Exhibit G provides that: (a) your liability on default includes acceleration of the note; increased interest rate, and payment of collection costs (including attorneys fees); and (b) you waive delinquency of collection, presentment for payment and duty to enforce security. The security agreement in Exhibit H provides that: (a) on your default, we can take possession of the collateral, and you are required to pay costs of collection (including attorneys fees) and (b) you waive any right to have Big O seek collection from a third party or for Big O to make presentment on payments made to Big O with respect to collateral. The Franchise Agreement provides that Big O will have good cause to terminate your Franchise Agreement if you (or any of your affiliates or guarantors) default on any loan, agreement or lease with Big O. Franchise Agreement Section 19.01(k).
Source: Item 10 — FINANCING (FDD pages 48–55)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, defaulting on a promissory note can have significant repercussions for a franchisee. The standard promissory note, outlined in Exhibit G, stipulates that upon default, the franchisee's liability includes the acceleration of the note, an increased interest rate, and responsibility for covering collection costs, including attorney's fees. Additionally, the franchisee waives certain rights, such as delinquency of collection, presentment for payment, and the duty to enforce security.
The security agreement in Exhibit H further details the consequences, stating that Big O Tires can take possession of the collateral upon default. The franchisee is also obligated to pay for collection costs, including attorney's fees, and waives the right to have Big O Tires seek collection from a third party or make presentment on payments related to the collateral.
Moreover, defaulting on any loan, agreement, or lease with Big O Tires, or its affiliates or guarantors, provides Big O Tires with grounds to terminate the Franchise Agreement, as specified in Section 19.01(k). This comprehensive set of consequences highlights the importance of meeting financial obligations to Big O Tires to maintain the franchise agreement and avoid substantial financial and operational setbacks.