Who is liable for any deficiency after the Secured Party applies the proceeds of Collateral disposition for a Deck Medic franchise?

According to Deck Medic's 2024 Franchise Disclosure Document, the Debtor, which in this case is the franchisee, remains liable for any deficiency after the Secured Party (Deck Medic, Inc.) applies the proceeds from the disposition of collateral. This is detailed in the Security Agreement that a franchisee signs. The Security Agreement grants Deck Medic a security interest in the franchisee's assets, including inventory, accounts, supplies, contracts, and proceeds. This collateral secures the franchisee's obligations to Deck Medic, such as payments on promissory notes and performance under the Franchise Agreement.

In the event of a default, Deck Medic has the right to enforce its security interest and exercise the rights of a secured creditor. This includes taking possession of the collateral and disposing of it to satisfy the franchisee's debt. The proceeds from the sale of the collateral will be applied to the franchisee's indebtedness, including the expenses of the sale. However, if the proceeds from the collateral are not sufficient to cover the full amount of the debt, the franchisee remains liable for the remaining balance, or the deficiency.

This means that even after Deck Medic has seized and sold the assets of the franchise, the franchisee is still responsible for paying any outstanding debt. This could have significant financial implications for a franchisee who is unable to meet their financial obligations. It is important for prospective franchisees to carefully consider the terms of the Security Agreement and understand the potential risks involved before investing in a Deck Medic franchise.