Does the Devon Creek agreement specify that the payment obligation gives rise to a lien?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
- 18.1.4 promptly pay all sums owing to Franchisor and its affiliates. Such sums shall include all damages, costs and expenses, including reasonable attorneys' fees, incurred by Franchisor as a result of any default by Franchisee. The payment obligation herein shall give rise to and remain, until paid in full, a lien in favor of Franchisor against any and all of the personal property, furnishings, equipment,
- fixtures, and inventory or other business assets owned by Franchisee at the time of default;
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, the franchise agreement specifies that under certain conditions, a payment obligation will give rise to a lien. Specifically, if the franchise agreement is terminated or expires, the franchisee is obligated to promptly pay all sums owed to Devon Creek and its affiliates. This payment obligation creates a lien in favor of Devon Creek against all personal property, furnishings, equipment, fixtures, inventory, or other business assets owned by the franchisee at the time of default.
This means that Devon Creek has a legal claim against the franchisee's business assets to cover any outstanding debts. This lien remains in effect until all outstanding payments are made in full. This provision protects Devon Creek's financial interests in the event of a franchisee's default and subsequent termination or expiration of the franchise agreement.
For a prospective Devon Creek franchisee, this clause highlights the importance of maintaining good financial standing and adhering to the terms of the franchise agreement to avoid default. Understanding the implications of this lien is crucial, as it could significantly impact the franchisee's assets in the event of financial difficulties or disputes with Devon Creek.