What security is required for Dryer Vent Squad financing?
Dryer_Vent_Squad Franchise · 2024 FDDAnswer from 2024 FDD Document
| Finance Type | e | Operating Territory Type: Single Territory | Operating Territory Type: Double Territory |
|---|---|---|---|
| Amount Financed | Up to $14,000 of Initial Franchise Fee | Up to $28,000 of Initial Franchise Fee | |
| Down Payment | Minimum of $21,000 | Minimum of $42,000 | |
| Term | Up to two (2) years | Up to two (2) years | |
| Finance Charges | Ten percent (10%) APR | Ten percent (10%) APR | |
| Payment Amount | Depends on amount financed with repayment self-amortized over two (2) year repayment period with monthly installments of principal and interest paid monthly. | ||
| Payment Terms | Payable monthly over two (2) year repayment period with monthly installments of principal and interest paid monthly. No early pre-payment penalty. | ||
| Security Required | Personal guaranty by you and if you are a Corporate Entity then personal guaranty by each individual owner. Additional security in the form of a security agreement related to the assets of the Franchised Business and the filing of a UCC-1. |
Source: Item 10 — FINANCING (FDD pages 29–30)
What This Means (2024 FDD)
According to Dryer Vent Squad's 2024 Franchise Disclosure Document, if Dryer Vent Squad offers direct financing for the initial franchise fee, the security required depends on whether the franchisee is operating a single or double territory. For both territory types, a personal guaranty is required from the franchisee. If the franchisee is a corporate entity, a personal guaranty is required from each individual owner.
In addition to the personal guarantees, Dryer Vent Squad requires additional security in the form of a security agreement related to the assets of the franchised business. They also require the filing of a UCC-1, which is a Uniform Commercial Code filing that creates a public record of Dryer Vent Squad's security interest in the assets of the business. This allows Dryer Vent Squad to have a legal claim on the business assets if the franchisee defaults on the loan.
These security measures are in place to protect Dryer Vent Squad's investment in the franchisee's business. By requiring personal guarantees and a security interest in the business assets, Dryer Vent Squad aims to minimize its risk of financial loss if a franchisee is unable to repay the loan. This is a fairly standard practice in the franchise industry, as franchisors often require some form of security when providing financing to franchisees.