What constitutes the 'Security' that the Dryer Vent Squad borrower agrees to provide for the loan?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
The Borrower agrees to provide their Dryer Vent Squad Business franchise rights, the purpose for which this loan was issued, and all related business assets including but not limited to office equipment, lease, phone numbers and customer base, referred to as the "Security", which shall transfer to the possession and ownership of the Lender IMMEDIATELY if this Note should be in default. The Security may not be sold or transferred without the Lender's consent during the course of this Note. If the Borrower breaches this provision, Lender may declare all sums due under this Note immediately due and payable, unless prohibited by applicable law.
If the Borrower defaults under this Note the Lender shall have the right to obtain ownership and possession of the Security. The Lender shall have the sole-option to accept it as full payment for the Borrowed Money without further liabilities or obligations. If the market value of the Security does not exceed the Borrowed Money, the Borrower shall remain liable for the balance due while accruing interest at the maximum rate allowed by law.
Source: Item 23 — RECEIPTS (FDD pages 51–207)
What This Means (2024 FDD)
According to the 2024 Dryer Vent Squad Franchise Disclosure Document, the 'Security' for a loan includes the franchisee's Dryer Vent Squad Business franchise rights. It also encompasses all related business assets, such as office equipment, the lease, phone numbers, and the customer base. This 'Security' immediately transfers to the lender if the borrower defaults on the loan.
The document specifies that the franchisee cannot sell or transfer the 'Security' without the lender's consent during the loan term. Violating this provision allows the lender to declare all outstanding sums immediately due and payable, unless prohibited by law.
If a franchisee defaults, Dryer Vent Squad's lender has the option to take ownership and possession of the 'Security' as full payment for the borrowed money, without further liabilities or obligations. However, if the market value of the 'Security' does not cover the full amount owed, the franchisee remains liable for the outstanding balance, which will continue to accrue interest at the maximum rate allowed by law.