What does Southern Steer require the franchisee to authorize regarding the UCC-1 Financing Statement?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
26.1. Franchisee's Assignment of the Lease. The Franchisee hereby assigns all of its right, title and interest in and to the Lease (which is incorporated herein by reference) to the Franchisor as security for the Franchisee's performance of the terms and conditions of this Agreement. If an Event of Default occurs, then the Franchisor will have the right and option, but not the obligation, to take and assume the Lease for the remaining term of the Lease under the same terms and conditions, including rental, as originally contracted for by the Franchisee. The Franchisee authorizes the Franchisor to file a UCC-1 Financing Statement and agrees to execute such other documents as may be reasonably required by the Franchisor's attorneys to perfect and record the Franchisor's security interest in the Lease.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, franchisees must authorize Southern Steer to file a UCC-1 Financing Statement. This statement serves to perfect and record Southern Steer's security interest in the lease agreement.
In practical terms, this means that as part of the franchise agreement, the franchisee is assigning their rights to the lease of the business location to Southern Steer as security. Should the franchisee fail to meet the terms of the agreement and an Event of Default occurs, Southern Steer has the option to assume the lease.
The franchisee also agrees to execute any other documents that Southern Steer's attorneys deem reasonably necessary to secure their interest in the lease. This clause ensures Southern Steer has a legal claim on the lease, protecting their investment and brand presence at that location if the franchisee defaults.