Under the Flowerama Franchise Agreement, what does
Flowerama Franchise · 2024 FDDAnswer from 2024 FDD Document
-------------------------------------------|-------------------------| | | FLOWERAMA OF AMERICA, INC., an Iowa corporation ("Secured Party" or "Franchisor"), on the one hand, and ("Debtor"), on the other hand, with reference to the following facts: | | | A. | Debtor has [purchased from Secured Party the "Assets" of] [entered into a Franchise | | | Agreement | with Secured Party for the Flowerama shop (the "Franchised (the "Franchised Location") and has agreed to operate the Franchised Unit as a franchisee of Franchisor. In conjunction with this acquisition, Debtor has agreed to pay Secured Party the sum of and/100 Dollars ($) in accordance with the terms of a Promissory Note (the " Note"), a copy of which is attached hereto as Exhibit A. | Unit") located at | | B. | Secured Party and Debtor desire to enter into this Agreement to grant Secured Party a security | | | set forth herein. | interest in all of the "Assets" at the Franchised Unit to secure payment of the Note on the terms and conditions | | NOW, THEREFORE, IT IS AGREED:
1. INCORPORATION OF RECITALS.
The Recitals set forth in Paragraphs A and B of this Agreement are true and correct and are incorporated herein as part of this Agreement.
2. SECURITY INTEREST.
In consideration of the foregoing, Debtor hereby grants to Secured Party a security interest as follows:
- a. Collateral. Debtor hereby grants to Secured Party a continuing security interest in all of the right, title and interest of Debtor in, and to, all leasehold improvements, fixtures, furnishings and equipment, inventory, supplies and delivery vehicles located at or used in connection with Debtor's Flowerama business at the Franchised Unit and the Franchised Location, now or hereafter leased or acquired by Debtor, together with all accounts, payment intangibles, attachments, accessories, additions, substitutions and replacements, all cash and non-cash proceeds derived from insurance or the disposition of such assets, all rights of Debtor to use the Flowerama trademarks, service marks, trade names, trade styles, patents, copyrights and their registrations, trade secret information and other proprietary rights, and all rights granted, owned or licensed to Debtor under contracts and licenses and franchise agreements for the use of the Flowerama trademarks, service marks, trade names, trade styles, patents, copyrights, trade secret information and other proprietary rights (collectively, the "Collateral") (i) to secure payment and performance by Debtor of the Note; and (ii) to secure payment to Secured Party by Debtor of all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees), that Secured Party may incur to enforce the terms of the Note and this Agreement.
- b. Security Interest. Debtor hereby grants Secured Party a valid and continuing lien on, and perfected security interest in, the Collateral.
c. Financing Statement. Debtor hereby authorizes Secured Party to file UCC-1 Financing Statements with the Secretary of State for any state Secured Party deems necessary, which shall evidence the security interests in the Collateral.
3. WARRANTIES OF DEBTOR.
Debtor warrants, covenants and represents to Secured Party that:
- a. Ownership of Collateral. Debtor is the owner of all of the Collateral, free and clear of all liens and encumbrances, except liens in favor of Secured Party.
- b. Encumbrances. Until all obligations of Debtor have been paid and performed under the Note and this Agreement, Debtor shall not create, incur, assume or suffer to exist any encumbrances on the Collateral, without the prior written consent of Secured Party.
- c. Defense and Indemnity. Debtor will defend its title, and Secured Party's interest, in the Collateral against all claims that may affect title to or Secured Party's security interest in the Collateral and will take any action necessary to remove any liens or encumbrances in the Collateral not authorized by this Agreement.
- d. Sale of Collateral. Until all obligations of Debtor have been paid and performed under the Note and this Agreement, Debtor shall not sell or otherwise dispose of any assets or properties comprising the Collateral without the prior written consent of Secured Party.
- e. Maintenance and Insurance. Debtor shall maintain the Collateral in good repair, working order and condition and shall maintain or cause to be maintained, at no cost or expense to Secured Party for the mutual benefit of Debtor and Secured Party, comprehensive broad form general public liability insurance against claims and liability for personal injury, death, or property damage arising from the use, occupancy or condition of the Franchised Unit and the improvements at the Franchised Unit.
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2024 FDD)
According to Flowerama's 2024 Franchise Disclosure Document, the Security Agreement outlines the security interest granted to Flowerama of America, Inc. by the franchisee (Debtor). The franchisee grants Flowerama a continuing security interest in all of the right, title, and interest of Debtor in, and to, all leasehold improvements, fixtures, furnishings and equipment, inventory, supplies and delivery vehicles located at or used in connection with Debtor's Flowerama business at the Franchised Unit and the Franchised Location, now or hereafter leased or acquired by Debtor, together with all accounts, payment intangibles, attachments, accessories, additions, substitutions and replacements, all cash and non-cash proceeds derived from insurance or the disposition of such assets, all rights of Debtor to use the Flowerama trademarks, service marks, trade names, trade styles, patents, copyrights and their registrations, trade secret information and other proprietary rights, and all rights granted, owned or licensed to Debtor under contracts and licenses and franchise agreements for the use of the Flowerama trademarks, service marks, trade names, trade styles, patents, copyrights, trade secret information and other proprietary rights (collectively, the "Collateral") (i) to secure payment and performance by Debtor of the Note; and (ii) to secure payment to Secured Party by Debtor of all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees), that Secured Party may incur to enforce the terms of the Note and this Agreement. This collateral secures the franchisee's obligations under the Promissory Note and covers costs incurred by Flowerama to enforce the Note and the Security Agreement. The Debtor also grants Flowerama a valid and continuing lien on, and perfected security interest in, the Collateral.
The Security Agreement includes warranties, covenants, and representations from the franchisee to Flowerama, such as the franchisee's ownership of the collateral free of liens (except those favoring Flowerama), restrictions on encumbering the collateral without Flowerama's consent, and the franchisee's duty to defend the title and Flowerama's interest in the collateral. The franchisee must also maintain the collateral in good repair and maintain comprehensive insurance, naming Flowerama as an additional insured, with a 30-day notice to Flowerama before any policy cancellation or material change.
Events of default under the Security Agreement and the Franchise Agreement include defaulting on obligations, selling the Flowerama business or its assets, bankruptcy or insolvency, and the institution of certain legal proceedings. Specifically, if the Debtor defaults in the performance of Debtor's obligations under this Agreement, or under the Franchise Agreement and such default shall continue for a period of ten (10) days after written notice of such default is given by Secured Party to Debtor, it will be considered an event of default.
This agreement ensures Flowerama has a secured interest in the franchisee's assets, providing a legal mechanism for Flowerama to protect its investment and enforce the terms of the Franchise Agreement. Prospective franchisees should carefully review the Security Agreement with legal counsel to understand the full scope of the collateral, the obligations, and the potential consequences of default.