What security is required by Cr3 American Exteriors to obtain 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's 2025 Franchise Disclosure Document, if Cr3 American Exteriors provides financing, the franchised business, including all accounts, equipment, furniture, and assets, and any earnings from any financial services business, will be required as security. Additionally, a personal guarantee is required. If the franchisee is an entity, its owners must personally guarantee the debt.
This means that if a franchisee defaults on the financing provided by Cr3 American Exteriors, Cr3 American Exteriors has a right to seize the assets of the business to recoup the outstanding debt. The personal guarantee ensures that the franchisee (and the owners of the franchisee entity) are personally liable for the debt, adding another layer of security for Cr3 American Exteriors.
It is fairly common in the franchise industry for franchisors to require security and personal guarantees when providing financing to franchisees. This reduces the franchisor's risk and ensures that the franchisee is fully committed to the success of the business. A prospective Cr3 American Exteriors franchisee should carefully consider the implications of providing such security and guarantee, and understand the potential consequences of default.