Does the Chem Dry Collateral Assignment specify any geographic limitations regarding the location of the furniture, fixtures, inventory, equipment, and supplies?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
of them may suffer, sustain or incur by reason of, or arising out of, Franchisee's breach of any of the terms of the Lease, including the failure to pay rent or any other terms and conditions of the Lease.
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- Conditional Assignment: Franchisee hereby grants to the Franchisor a security interest in and to the Lease, all of the furniture, fixtures, inventory, equipment, and supplies located in the Site and the franchise relating to the Franchised Business, and all of the Franchisee's rights, title and interest in and to the Lease as conditional for the payment of any obligation, liability or other amount owed by the Franchisee or its affiliates to the Lessor arising under the Lease and for any default or breach of any of the terms and provisions of the Lease, and for any default or breach of any of the terms and provisions of the Franchise Agreement. In the event of a breach or default by Franchisee under the terms of the Lease, or, in the event Franchisor makes any payment to the Lessor as a result of the Franchisee's breach of the Lease, then such payment by the Franchisor, or such breach or default by the Franchisee, shall at Franchisor's option be deemed to be an immediate default under the Franchise Agreement, and the Franchisor shall be
entitled to the possession of the Site and to all of the rights, title and interest of the Franchisee in and to the Lease and to all other remedies descr
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, the Collateral Assignment outlines the security interest the franchisor, Chem Dry, has in the franchisee's assets. Specifically, the franchisee grants Chem Dry a security interest in the lease, furniture, fixtures, inventory, equipment, and supplies located at the 'Site'.
This 'Site' is defined earlier in the exhibit as the location of the franchised Chem Dry business. This implies a geographic limitation: the collateral is limited to the furniture, fixtures, inventory, equipment, and supplies located at the specific site of the Chem Dry franchise. If a franchisee were to move these assets to a different location, it could potentially be a breach of the Collateral Assignment, as the security interest is tied to the 'Site'.
In the event of a breach of the lease or the Franchise Agreement, Chem Dry has the right to take possession of the Site, including all furniture, fixtures, inventory, books, records, papers, and accounts of the franchisee. This further reinforces the geographic limitation, as Chem Dry's right to take possession is tied to the physical location of the franchised business.