What are the consequences of defaulting on the direct financing agreement for a Deck Medic franchise?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
we currently offer is described in the tables below:
| Finance Type | Direct – Initial | Indirect | |---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|-----------| | | Franchise Fee | | | Amount | $20,000 | As agreed | | Financed | | | | Down | $10,000 | As agreed | | Payment | | | | Term | 36 months | As agreed | | Interest | 8% APR or the highest rate allowed by law | As agreed | | Finance | None if paid in full within term | As agreed | | Charges | | | | Payment | $626.73 | As agreed | | Amount | | | | Payment Terms | $10,000 down payment due upon signing of Franchise Agreement with the outstanding balance due monthly on the second Wednesday of each month | As agreed | | Security | Personal Guaranty; Security Agreement and UCC-1 | As agreed | | Required | | | | Liability Upon Default | Loss of franchise and other remedies available to use under the Franchise Agreement, security agreement and note | As agreed | | Loss of Legal Rights on Default | Waive various notices, rights and defenses; confess judgment | As agreed | | Referral | n/a | Yes | | Fee | | | If you fail to repay your loan, we have the right to terminate your franchise and acquire the rights to operate your Deck Medic Business directly. We may offer financing to new and existing franchisees who wish to expand with additional outlets. Any payments under the notes are non-refundable. You must enter into the Note at the time you execute the Franchise Agreement in order to qualify for our financing program. A copy of the Promissory Note for Initial Franchise Fees is attached as Exhibit 6 of the Franchise Agreement.
You must sign a security agreement for all the Franchised Business' assets, including after acquired property. We will file a UCC-1 financing statement with the appropriate governmental authority. (See Exhibit 7 to the Franchise Agreement.) We have the right to require additional forms ofsecurity.
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, if a franchisee fails to repay their loan under the direct financing agreement, Deck Medic has the right to terminate the franchise agreement and directly acquire the rights to operate the Deck Medic business. Additionally, the franchisee must sign a security agreement for all of the franchised business's assets, including any property acquired after the agreement. Deck Medic will also file a UCC-1 financing statement with the appropriate governmental authority. The franchisee may be required to provide additional forms of security as well.
Under the promissory note, the franchisee waives various notices, rights, and defenses, including rights to diligence, demand, presentment for payment, notice of nonpayment and protest, and notice of amendments or modifications. The franchisee also waives any defense under the statute of limitations and allows that a confessed judgment may be taken against them.
The table outlining the direct financing terms for the initial franchise fee states that the liability upon default includes the loss of the franchise and other remedies available to Deck Medic under the Franchise Agreement, security agreement, and note. Furthermore, the franchisee loses legal rights on default, agreeing to waive various notices, rights, and defenses, and confess judgment.