What documents are collectively referred to as the 'Loan Documents' for a Management Recruiters loan?

According to Management Recruiters's 2024 Franchise Disclosure Document, if a franchisee qualifies for a loan from HQ Financial Corporation, Management Recruiters's affiliate, they will be required to sign a Promissory Note and a Security Agreement. These two documents, the Promissory Note and the Security Agreement, are collectively referred to as the "Loan Documents."

The Loan Documents are important because they outline the terms and conditions of the loan, including the repayment schedule, interest rate, and any collateral required to secure the loan. The Security Agreement grants Management Recruiters a security interest in the franchisee's trade accounts and notes receivable (if Management Recruiters does not already own the accounts receivable), franchise rights, agreements between the franchisee and Management Recruiters, and certain other assets.

Prospective franchisees should carefully review both the Promissory Note and the Security Agreement to fully understand their obligations and the potential consequences of default. Defaulting on the Loan Documents can have serious repercussions, including the loss of the franchise through the exercise of Management Recruiters's rights to the collateral. It is also important to note that under the Loan Documents, the franchisee and any guarantors waive certain rights, such as the right to a jury trial.