Does the Stretch Zone security interest cover obligations that are contingent?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
2. Obligations Secured.
The security interest secures the payment and performance of all indebtedness, obligations and liabilities of any kind of the Franchisee/Debtor to the Franchisor/Secured Party now or later existing, arising directly between the Franchisee/Debtor and the Franchisor/Secured Party including the Franchisee's/Debtors obligations under the Area Development Agreement and Franchise Agreement (collectively, the "Obligations").
Source: Item 2 — Obligations Secured. (FDD page 263)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, the security interest granted by the franchisee secures all types of indebtedness and obligations to Stretch Zone Franchising. This includes all obligations and liabilities of any kind that the franchisee owes to Stretch Zone, whether they currently exist or arise in the future.
This security interest specifically covers the franchisee's obligations under both the Area Development Agreement and the Franchise Agreement. This means that Stretch Zone has a secured interest in the franchisee's assets to ensure the franchisee fulfills all financial and performance responsibilities outlined in these agreements.
In practical terms, this clause means that if a Stretch Zone franchisee fails to meet their obligations, Stretch Zone can claim the assets covered by the security interest to recover any losses. This is a standard practice in franchising, designed to protect the franchisor's investment and brand integrity. Prospective franchisees should carefully review the Area Development Agreement and Franchise Agreement to fully understand the scope of these obligations and the assets that may be subject to the security interest.