Does Deck Medic require franchisees to sign a security agreement for all Franchised Business assets, including after-acquired property?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Under every Note, you waive various notices, rights and defenses, including your rights to diligence, demand, presentment for payment, notice of nonpayment and protest, and notice of amendments or modifications. You also waive any defense under the statute of limitations and allow that a confessed judgment may be taken against you. Except as disclosed above, we do not offer financing that requires you to waive notice, confess judgment or waive a defense against us or the lender, although you may lose your defenses against us and others in a collection action on a Note that is sold or discounted. We have no plans to sell or assign any Note from you or any other franchisee to a third party; however, we have the right to do so in the future. Upon any sales or assignment, we will not remain primarily obligated to provide the financial goods or services.
ITEM 11 FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING
Except as listed below, we are not required to provide you with any assistance.
Pre-Opening Obligations
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- Grant of Franchise We will grant to you the right to operate the Franchised Business within a designated operating territory. (Franchise Agreement, Article 2);
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Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2024 FDD)
According to Deck Medic's 2024 Franchise Disclosure Document, if Deck Medic provides direct financing for the initial franchise fee, franchisees are required to sign a security agreement for all of the Franchised Business's assets, including any property acquired after the agreement is signed. This is to ensure Deck Medic has a secured interest in the business assets in case of default. Deck Medic will also file a UCC-1 financing statement with the appropriate governmental authority, which serves as public notice of their security interest.
The security agreement is listed as a requirement under the direct financing option for the initial franchise fee. The FDD specifies that the amount financed for the initial franchise fee is $20,000, with a $10,000 down payment required. The remaining balance is financed over a term of 36 months at an 8% APR, resulting in monthly payments of $626.73.
This security agreement, along with a personal guaranty, protects Deck Medic in case of franchisee default. If a franchisee defaults, Deck Medic has the right to pursue remedies available under the Franchise Agreement, security agreement, and promissory note, including the loss of the franchise. The franchisee also waives various legal rights and defenses and may be subject to a confessed judgment. This is a fairly standard practice in franchising when the franchisor provides financing, as it reduces the franchisor's risk.