What rights does the Secured Party have regarding the collateral while in possession of it for Big O Tires?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
. During the time that Secured Party is in possession of the Collateral, and to the extent permitted by law, Secured Party shall have the right to hold, use, operate, manage and control all or any part of the Collateral; to make all such repairs, replacements, alterations, additions and improvements to the Collateral as it may deem proper; and to demand, collect and retain all earnings, proceeds from such use and all other costs, expenses, charges, damage or loss by reason of such use. Notwithstanding the foregoing, Secured Party has no obligation to clean-up or otherwise prepare the Collateral for sale.
- 11.3. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if it takes such action for that purpose as Debtor shall request, but failure to honor any such request shall not of itself be deemed a failure to exercise reasonable care. Secured Party shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties nor to protect, preserve or maintain any security interest given to secure any of the Collateral. Debtor waives any right it may have to require Secured Party to pursue any third person for any of the Obligations.
- 11.4. After an Event of Default as set forth in Section 10 hereof, Debtor hereby irrevocably appoints Secured Party as the attorney-in-fact of the Debtor, with full powers of substitution and at the cost and expense of Debtor, to reasonably exercise any of the following powers with respect to any of the accounts;
- a. Demand, sue for, collect and give receipts for any payments due thereon or by virtue thereof;
- b.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires' 2025 Franchise Disclosure Document, the Secured Party, while in possession of the collateral, has specific rights regarding the collateral. The Secured Party has the right to hold, use, operate, manage, and control all or any part of the collateral to the extent permitted by law. This includes the ability to make repairs, replacements, alterations, additions, and improvements to the collateral as deemed proper by the Secured Party. Furthermore, the Secured Party is entitled to demand, collect, and retain all earnings and proceeds from the use of the collateral, as well as any costs, expenses, charges, damage, or loss resulting from such use.
However, the Secured Party has no obligation to clean up or otherwise prepare the collateral for sale. The Secured Party is considered to have exercised reasonable care in the custody and preservation of the collateral if it takes actions requested by the Debtor for that purpose. The failure to honor any such request does not automatically constitute a failure to exercise reasonable care. The Secured Party is not required to take steps necessary to preserve any rights in the collateral against prior parties or to protect, preserve, or maintain any security interest given to secure the collateral.
The Debtor waives any right to require the Secured Party to pursue any third person for any of the obligations. After an Event of Default, the Debtor irrevocably appoints the Secured Party as their attorney-in-fact, with full powers of substitution, to exercise certain powers with respect to any of the accounts, including the power to demand, sue for, collect, and give receipts for any payments due. These rights and responsibilities define the scope of control the Secured Party has over the collateral during the period of possession, balancing the interests of both parties under the security agreement.