What security is required by Cr3 American Exteriors for financing?
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 |
Source: Item 10 — FINANCING (FDD page 31)
What This Means (2025 FDD)
According to Cr3 American Exteriors' 2025 Franchise Disclosure Document, if Cr3 American Exteriors provides financing for the initial franchise fee, the franchised business, including all accounts, equipment, furniture, and assets, along with any earnings from any financial services business, will be used as security. Additionally, a personal guarantee is required.
Specifically, if the franchisee is an entity, such as a corporation, each officer and shareholder of the franchisee must execute a personal guaranty for the note, agreeing to be personally and jointly and severally liable for its repayment.
This means that in the event of default, Cr3 American Exteriors has the right to seize the business assets and pursue the personal assets of the franchisee and its owners to recover the outstanding debt. This is a fairly standard practice in franchising, as it protects the franchisor's investment and encourages franchisees to manage their businesses responsibly. The FDD also states that there is no prepayment penalty, but upon default, the franchisee will have an accelerated obligation to pay the entire amount due, pay court costs and attorney fees, and face termination of the franchise agreement.