Does the Petro Stopping Center agreement constitute a lien on the franchisee's interest in the lease?

According to the 2025 Petro Stopping Center Franchise Disclosure Document, by signing the Franchise Agreement, the franchisee grants Petro Franchise Systems LLC a first priority security interest in the collateral. The collateral includes the operating assets, such as furniture, fixtures, equipment, supplies, accounts, receivables, inventory, operating assets, records, inventory and all tangible and intangible assets constituting the Petro Center and the Site, including the Lease, replacements. This security interest is subject to subordination to an Approved Financing that meets specific requirements, in the form of an agreement with the franchisee's lender that Petro Stopping Center approves.

This arrangement means that Petro Stopping Center has a legal claim against the franchisee's assets, including the lease, to secure the franchisee's obligations under the Franchise Agreement. However, this claim is secondary to any approved financing the franchisee obtains, provided that Petro Stopping Center agrees with the lender.

In practical terms, if the franchisee defaults on their obligations to Petro Stopping Center, Petro Stopping Center can take possession of the specified collateral, which includes the lease. This could significantly impact the franchisee's ability to operate the Petro Stopping Center. The franchisee must also sign a Lease Assignment and Memorandum of Right of First Refusal with the lessor, giving Petro Stopping Center further rights regarding the lease.

Prospective franchisees should carefully consider the implications of granting this security interest and understand the conditions under which Petro Stopping Center can exercise its rights. It is advisable to consult with legal and financial professionals to fully understand the risks and obligations associated with this aspect of the Franchise Agreement.