Does the security interest granted to Crave include proceeds from the sale of furniture, fixtures, equipment, signage, and realty?

According to Crave's 2025 Franchise Disclosure Document, as a franchisee, you grant Crave a security interest in the furniture, fixtures, equipment, signage, and realty of the franchised business. This also extends to any similar property acquired later, including additions, substitutions, replacements, proceeds, and products related to the franchised business. This means that Crave has a legal claim on these assets, referred to as the 'Collateral,' to secure your obligations under the franchise agreement.

This security interest ensures that Crave is protected financially in case you default on your obligations. Should you fail to meet your financial responsibilities, Crave has the right to take possession of and potentially sell the specified assets to recover any outstanding debts. This is a common practice in franchising, as it provides the franchisor with a means of recourse if the franchisee does not adhere to the terms of the agreement.

However, the document also states that Crave's security interest is subordinated to any financing related to your operation of the Franchised Business, including, but not limited to, a real property mortgage and equipment leases. This subordination clause means that if you have a mortgage on the property or leases on equipment, those lenders would have priority over Crave's security interest in those specific assets. This is a typical arrangement, as it allows franchisees to obtain necessary financing to start and operate their businesses while still providing the franchisor with a secondary level of security.

Prospective franchisees should carefully consider the implications of granting a security interest, understanding what assets are included and the conditions under which Crave could exercise its rights. It is also important to note the subordination clause and how it affects the priority of claims in the event of default.