What are the liabilities upon default of the Cr3 American Exteriors financing agreement?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
| Item Financed1 | All or a Portion of the Initial Franchise Fee. |
|---|---|
| Source of Financing2 | Us |
| Down Payment | Varies |
| Amount Financed | Up to 100% |
| Interest Rate/Finance Charge | 12% per annum (including finance charges) |
| Period of Repayment | Varies |
| Security Required | The Franchised Business including all accounts, equipment, furniture, and assets and any earnings from any financial services business; Personal guarantee. |
| Whether a Person Other than the Franchisee | If the franchisee is an entity, its owners must |
| Must Personally Guarantee the Debt3 | personally guarantee the debt |
| Prepayment Penalty | None |
| Liability Upon Default | Accelerated obligation to pay the entire amount due, pay our court costs and attorney fees incurred in collecting the debt, and termination of the franchise. |
| Waiver of Defenses or Other Legal Rights | Waiver of right to jury trial; homestead and other exemptions; waiver of presentment, demand, protest, notice of dishonor. |
| Intent to Sell4 | There is no intent to sell, assign or factor the debt to a third party. |
Source: Item 10 — FINANCING (FDD page 31)
What This Means (2025 FDD)
According to Cr3 American Exteriors's 2025 Franchise Disclosure Document, if a franchisee defaults on their financing agreement with Cr3 American Exteriors, several liabilities may arise. The entire amount due under the financing agreement becomes immediately payable, which is referred to as an accelerated obligation. This means the franchisee loses the benefit of paying off the debt over time and must pay the full remaining balance at once.
In addition to the accelerated debt obligation, the franchisee is responsible for covering Cr3 American Exteriors's court costs and attorney fees incurred while collecting the debt. This can add a significant financial burden on top of the original debt. Furthermore, the franchise agreement may be terminated, resulting in the loss of the franchise itself.
To secure the financing, Cr3 American Exteriors requires a security interest in the franchised business, including all accounts, equipment, furniture, assets, and earnings from any financial services business. They also require a personal guarantee. If the franchisee is an entity, its owners must personally guarantee the debt. Cr3 American Exteriors also requires a waiver of right to jury trial; homestead and other exemptions; waiver of presentment, demand, protest, notice of dishonor.