What does the security interest granted by a Petro Stopping Center franchisee secure?
Petro_Stopping_Center Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Grant: By signing this Agreement you:
(i) grant to us, a first priority security interest in the Collateral, which interest we will agree to subordinate to an Approved Financing, which has met the requirements set forth in Section 4.4, in the form of an agreement with your lender that we approve.
Collateral The Operating Assets, including 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.
Source: Item 14 — Other investments (FDD pages 131–208)
What This Means (2025 FDD)
According to Petro Stopping Center's 2025 Franchise Disclosure Document, by signing the Franchise Agreement, a franchisee grants Petro Franchise Systems LLC a first priority security interest in the Collateral. This security interest is subject to subordination to an Approved Financing that meets the requirements outlined in Section 4.4, which involves an agreement with the franchisee's lender that Petro Stopping Center approves.
The Collateral is defined as the Operating Assets, including 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.
In practical terms, this means that Petro Stopping Center has a legal claim on the franchisee's business assets to protect its financial interests. If the franchisee defaults on their obligations to Petro Stopping Center, the company can seize these assets. However, this security interest can be subordinated to financing obtained from an approved lender, meaning the lender would have the first claim on the assets in case of default on the loan. This arrangement allows franchisees to secure financing while still providing Petro Stopping Center with a degree of financial protection.