What is included when the lender accelerates the loan repayment for a Dryer Vent Squad franchisee?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7. ACCELERATION. If the Borrower is in default under this Note or is in default under another provision of this Note, and such default is not cured within the minimum allotted time by law after written notice of such default, then Lender may, at its option, declare all outstanding sums owed on this Note to be immediately due and payable.
This includes rights of possession to the Security mentioned in Section 3.
Source: Item 23 — RECEIPTS (FDD pages 51–207)
What This Means (2024 FDD)
According to the 2024 Dryer Vent Squad Franchise Disclosure Document, if a franchisee defaults on their loan and the lender accelerates the repayment, all outstanding sums owed on the note become immediately due and payable. This acceleration includes the lender's rights of possession to the 'Security' as defined in Section 3 of the loan agreement.
The 'Security' consists of the Dryer Vent Squad Business franchise rights, the business assets related to the loan's purpose, including office equipment, the lease, phone numbers, and the customer base. These assets immediately transfer to the lender's possession and ownership if the loan is in default. The franchisee cannot sell or transfer these assets without the lender's consent during the loan term; breaching this provision allows the lender to demand immediate payment of all sums due.
If the franchisee defaults, the lender has the option to accept the Security as full payment for the borrowed money, releasing the franchisee from further liabilities or obligations. However, if the market value of the Security is less than the outstanding borrowed money, the franchisee remains liable for the remaining balance, which continues to accrue interest at the maximum rate allowed by law. This arrangement protects the lender's investment while outlining the franchisee's obligations and potential liabilities in case of default.