What is the nature of the security interest granted in the Creative World School Security Agreement?
Creative_World_School Franchise · 2025 FDDAnswer from 2025 FDD Document
gainst the principal amount outstanding in inverse order of maturity and shall not postpone the due date of any subsequent payment unless the Lender shall otherwise agree in writing in its sole discretion.
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- Nonassumability. This Note is not assumable without the Lender's prior written consent. Such assumption may be granted at the Lender's sole discretion and may be denied without regard to a showing of an impairment of the Lender's security or an evaluation of the creditworthiness of the proposed assuming party and regardless of whether the Franchisor consents to a transfer of the Franchise Agreement.
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- WAIVER OF JURY TRIAL. THE FRANCHISEE, BY SIGNING THIS NOTE, AND THE LENDER, BY ACCEPTANCE OF THIS NOTE, MUTUALLY AND WILLINGLY WAIVE THE RIGHT TO A TRIAL BY JURY OF ANY AND ALL CLAIMS MADE BETWEEN THEM WHETHER NOW EXISTING OR ARISING IN THE FUTURE, INCLUDING ANY AND ALL CLAIMS, DEFENSES, COUNTERCLAIMS, CROSSCLAIMS, THIRD PARTY CLAIMS AND INTERVENOR'S CLAIMS WHETHER ARISING FROM OR RELATED TO THE NEGOTIATION, SIGNING AND PERFORMANCE OF THE TRANSACTIONS TO WHICH THIS NOTE RELATES.
| ` | "FRANCHISEE" |
|---|---|
| By: | |
| Name: | |
| Title: |
SECURITY AGREEMENT
| is made and entered into as of , 201 THIS SECURITY AGREEMENT (this "Agreement"), by and among DISCOUNT PRESCHOOL, LLC, a Florida limited liability company ("Secured Party"), and , a , whose principal business address is ("Debtor"). |
|---|
| A. |
| Secured Party is selling to Debtor the opening package equipment, materials and |
| supplies (the "Equipment") more particularly described in Exhibit "C" to that certain Franchise |
| Agreement dated |
| (the "Franchise Agreement"), by and between |
| Debtor and CREATIVE WORLD SCHOOLS FRANCHISING COMPANY, INC., a Florida |
| corporation, for a total purchase price of $ |
| ("Purchase Price"). |
| B. |
| Secured Party is financing the purchase of the Equipment, and Debtor is granting |
| to Secured Party a security interest in the Collateral in order to secure Debtor's unconditional |
| obligation to pay the Purchase Price to Secured Party. |
| ACCORDINGLY, for good and valuable consideration, the parties hereby agree as |
| follows: |
| 1. |
| Security Interest. In order to secure payment and performance in full of the obligation of |
| Debtor to pay the Purchase Price, and all other obligations of Debtor to Secured Party, arising, |
| under or in respect of the Franchise Agreement and this Agreement, including but not |
| limited to |
| any extensions, modifications, substitutions, increases or renewals thereof, (ii) payment of all |
| amounts advanced or incurred by Secured Party to preserve, protect, defend, and enforce its |
| rights under this Agreement, the Franchise Agreement, and with respect to the Collateral, and (iii) |
| payment of all fees, costs and expenses incurred by Secured Party in connection therewith (the |
| "Obligations"), Debtor hereby grants to Secured Party a continuing, vali |
Source: Item 23 — RECEIPTS (FDD pages 80–247)
What This Means (2025 FDD)
According to the 2025 Creative World School Franchise Disclosure Document, a franchisee (referred to as "Debtor") grants the "Secured Party" (Discount Preschool, LLC) a continuing, valid, and unavoidable security interest in the franchisee's assets. This security interest ensures the franchisee fulfills their obligation to pay the purchase price for the opening package equipment, materials, and supplies. The purchase price is not specified in this excerpt. This obligation extends to all other debts the franchisee owes to the Secured Party, including those arising from the Franchise Agreement. It also covers any amounts the Secured Party spends to protect its rights under the agreement and the costs associated with enforcing those rights.
The security interest applies to a broad range of the franchisee's property, including furniture, fixtures, equipment, accessories, inventory, licenses, permits, goods, materials, supplies, accounts, and general intangibles. It specifically includes the equipment and customer contracts used in operating the Creative World School franchise. The security interest covers all these assets regardless of their location and whether they are currently owned or acquired in the future.
Furthermore, the security interest extends to any additions, attachments, accessories, accessions, parts, fittings, and special tools affixed to the listed property or used in connection with it. It also includes replacements, substitutions, and exchanges for these items. Critically, the security interest encompasses all proceeds from the listed property, including cash and noncash proceeds, such as insurance payouts. This comprehensive security interest gives Creative World School a strong claim on the franchisee's assets in case of default, allowing them to seize and liquidate the assets to recover outstanding debts.