Can Stretch Zone offer the collateral for sale for one total price?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
llateral, and by purchase, becomes the owner of the Collateral.
- (g) Upon the exercise of any of the rights or remedies of the Franchisor/Secured Party under this Agreement, the Collateral may be offered for sale for one total price, and the proceeds of the sale accounted for in one account without distinction between items of security or without assigning to them any proportion of the proceeds of the sale. The Franchisee/Debtor insofar as it legally may do so waives the application of any doctrine of marshalling. At the option of the Franchisor/Secured Party, the Collateral may be offered for sale separately at different times and/or locations.
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, when exercising rights or remedies under the franchise agreement, Stretch Zone has the option to offer the collateral for sale as a single package deal. The proceeds from such a sale can be accounted for as one lump sum, without needing to break down the value of individual items or assign specific proportions of the proceeds to each item. This means Stretch Zone is not obligated to sell the collateral in separate pieces or assign individual values to each secured item during the sale.
This clause provides Stretch Zone with flexibility in how it liquidates the collateral, potentially streamlining the sale process. However, it may also mean that a franchisee's assets are sold in a way that doesn't maximize their individual values. A prospective franchisee should consider the implications of this provision, particularly in the event of financial distress or termination of the franchise agreement.
Furthermore, the FDD states that Stretch Zone can also choose to offer the collateral for sale separately, at different times and locations. This flexibility allows Stretch Zone to pursue the most advantageous sale strategy depending on market conditions and the nature of the collateral. The FDD also clarifies that a separate sale does not prevent later sales of the remaining collateral, or the exercise of any other rights or remedies Stretch Zone has under the agreement.