What is considered 'Collateral' for the security interest granted to Cilantro Taco Grill?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee grants to Franchisor a security interest ("Security Interest") in all of the furniture, fixtures, equipment, signage, and realty (including Franchisee's interests under all real property and personal property leases) of the Restaurant, together with all similar property now owned or hereafter acquired, additions, substitutions, replacements, proceeds, and products thereof, wherever located, used in connection with the Restaurant.
All items in which a security interest is granted are referred to as the "Collateral".
Source: Item 23 — RECEIPT (FDD pages 52–208)
What This Means (2024 FDD)
According to the 2024 Cilantro Taco Grill Franchise Disclosure Document, the "Collateral" for the security interest granted to Cilantro Taco Grill includes all of the restaurant's furniture, fixtures, equipment, signage, and realty. This also extends to the franchisee's interests under all real property and personal property leases.
This security interest covers similar property that the franchisee currently owns or may acquire in the future, including any additions, substitutions, replacements, proceeds, and products related to these items, regardless of their location, as long as they are used in connection with the Cilantro Taco Grill restaurant.
This means that if a franchisee defaults on their obligations to Cilantro Taco Grill, the franchisor has a legal claim on these assets and can seize them to recover outstanding debts. The security interest ensures that Cilantro Taco Grill has a way to recoup losses if the franchisee fails to meet their financial responsibilities.