Is the Company required to perfect a security interest in collateral for Browns Chicken obligations?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
original.
I. Memorandum of Franchise Agreement.
Brown shall have the right to record with appropriate local governmental authorities a Memorandum of Franchise Agreement, in form satisfactory to Brown, against the Premises and Franchisee shall fully cooperate with Brown in its effort to record same, including the execution of all necessary and appropriate documents.
J. Pledge of Assets.
As security for payment of all sums due from Franchisee to Brown hereunder and for performance of any and all obligations of Franchisee as set forth in this Franchise Agreement, Franchisee shall and hereby does grant to Brown a continuing security interest in certain property of Franchisee as more particularly described on Rider D to this Franchise Agreement, and Franchisee shall execute a Security Agreement and Financing Statement in substantially the form set forth in Rider D hereto. Franchisee consents to Brown filing a Uniform Commercial Code Financing Statement in the form attached at Rider F hereto against the Collateral described on Rider E. Franchisee shall permit no financing statement or lien to be filed or recorded against the property identified in Rider D hereto other than Brown's lien as described herein. However, Brown will not unreasonably withhold its consent to the filing of a lien against the Collateral by a lender from whom Franchisee obtains financing in connection with the establishment of the franchised business. Brown will in such cases agree to subordinate its lien to that of the lender. Upon Franchisee's failure to perform any term or pay any sum due under this Franchise Agreement, Brown shall have the right, without notice to Franchisee, to take immediate possession of the property identified on Rider D hereto, which Rider D is incorporated herein by this reference.
K. Variation of Standards.
Because complete and detailed uniformity under many varying conditions might not be possible or practical, Franchisee acknowledges that Brown specifically reserves the right and privilege, as Brown considers to be best, to vary standards described in this Agreement for any franchise owner based upon the peculiarities of any condition that Brown considers important to that franchise owner's successful operation. Franchisee has no right to require Brown to grant Franchisee a similar variation or accommodation.
L. Waiver of Jury Trial.
Each party irrevocably waives trial by jury in any action, proceeding or counterclaim, whether at law or in equity, brought by either party.
**M.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, Browns Chicken requires franchisees to grant them a continuing security interest in certain franchisee property as security for the payment of all sums due and the performance of all obligations under the Franchise Agreement. This security interest is detailed in Rider D of the Franchise Agreement, and franchisees must execute a Security Agreement and Financing Statement in the form provided in Rider D. Browns Chicken is authorized to file a Uniform Commercial Code Financing Statement against the collateral described in Rider E.
The franchisee is prohibited from allowing any other financing statement or lien to be filed against the property identified in Rider D, except for Browns Chicken's lien. However, Browns Chicken will not unreasonably withhold consent for a franchisee to obtain financing from a lender for establishing the franchised business and will subordinate its lien to that of the lender in such cases. Upon the franchisee's failure to perform any term or pay any sum due under the Franchise Agreement, Browns Chicken has the right to take immediate possession of the property identified in Rider D without notice to the franchisee.
Furthermore, the franchisee grants Browns Chicken a security interest in the collateral, which includes 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, along with all additions, accessions, proceeds, and products of the aforementioned items. This collateral is used to secure all debts, obligations, and liabilities of the franchisee to Browns Chicken arising out of the Franchise Agreement. The franchisee authorizes Browns Chicken to file Uniform Commercial Code Financing Statements to perfect this security interest and waives any requirement for the franchisee to execute these statements.