Under the Note, what notices, rights, and defenses does Deck Medic require franchisees to waive?
Deck_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
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 enters into a promissory note with Deck Medic, they must waive certain legal protections. Specifically, under every Note, the franchisee waives various notices, rights, and defenses. These include rights to diligence, demand, presentment for payment, notice of nonpayment and protest, and notice of amendments or modifications. Franchisees also waive any defense under the statute of limitations and allow that a confessed judgment may be taken against them.
In practical terms, this means that if Deck Medic provides financing and the franchisee defaults, the franchisee gives up some of their rights to challenge Deck Medic's actions. For example, the franchisee cannot demand detailed proof of the debt ('diligence') or require Deck Medic to formally present the note for payment. They also cannot claim they weren't properly notified about non-payment or changes to the agreement. Waiving the statute of limitations means Deck Medic can pursue legal action even after the usual time limit for such claims has expired.
The most significant waiver is allowing a 'confessed judgment.' This means the franchisee agrees in advance that Deck Medic can obtain a court judgment against them without a full trial or defense. This is a substantial risk, as it streamlines the process for Deck Medic to collect the debt and seize assets. While Deck Medic states they have no plans to sell or assign any Note from you or any other franchisee to a third party; however, they have the right to do so in the future. Upon any sales or assignment, Deck Medic will not remain primarily obligated to provide the financial goods or services.
Prospective franchisees should carefully consider these waivers and seek legal advice before signing any financing agreements with Deck Medic. It is crucial to understand the implications of giving up these rights and defenses, as it could significantly impact their ability to protect their business and personal assets in case of financial difficulties. Franchisees should also inquire about the circumstances under which Deck Medic might sell or assign the note to a third party, as this could further complicate the situation.