factual

What does the Browns Chicken Security Agreement authorize the Secured Party to file?

Browns_Chicken Franchise · 2025 FDD

Answer from 2025 FDD Document

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.

Source: Item 22 — Contracts (FDD page 43)

What This Means (2025 FDD)

According to the 2025 Browns Chicken Franchise Disclosure Document, the franchisee grants Browns Chicken a continuing security interest in certain property as security for the payment of all sums due to Browns Chicken and for the performance of any and all obligations of the franchisee as set forth in the Franchise Agreement. The franchisee must execute a Security Agreement and Financing Statement.

Browns Chicken is authorized to file a Uniform Commercial Code Financing Statement against the collateral described on Rider E. The franchisee cannot allow any other financing statement or lien to be filed or recorded against the property identified in Rider D, other than Browns Chicken's lien.

However, Browns Chicken will not unreasonably withhold its consent to the filing of a lien against the collateral by a lender from whom the franchisee obtains financing in connection with establishing the franchised business. In such cases, Browns Chicken will agree to subordinate its lien to that of the lender. This means that if a franchisee needs to borrow money to start the business, Browns Chicken may allow the bank's lien to take priority over Browns Chicken's own security interest in the franchisee's assets.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.