What specific property at a Buona Franchised Restaurant is considered 'Collateral' for the security interest?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
To secure the payment and performance by Debtor of all obligations and liabilities under the Franchise Agreement (such payment and performance of such obligations and liabilities collectively, "Obligations"), Debtor shall and hereby does grant, convey, assign and transfer to Secured Party, a security interest in and to the Franchise Agreement and all signs and other appurtenances and other property, real and personal, bearing any of the Proprietary Marks used at, located on or affixed to the Franchised Business operated by Debtor ("Buona Restaurant"), and all equipment, fixtures, furnishings and improvements located at the Buona Restaurant, whether now owned or hereafter acquired by Debtor (the "Collateral").
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the collateral for the security interest includes specific items related to the franchised business. Buona requires the franchisee to grant a security interest in the Franchise Agreement itself, along with all signs and appurtenances bearing Buona's proprietary marks that are used at, located on, or affixed to the Buona Restaurant.
This collateral also extends to all equipment, fixtures, furnishings, and improvements situated at the Buona Restaurant. This encompasses all such items whether they are already owned by the franchisee at the time of the agreement or acquired by them later.
In essence, Buona takes a security interest in virtually all assets associated with the operation of the franchised restaurant. This is a common practice in franchising, as it protects the franchisor's investment and ensures that the franchisee fulfills their obligations under the Franchise Agreement. Prospective franchisees should understand that these assets could be at risk in the event of a default.