The Collateral Assignment of Franchise Agreement is utilized when a franchisee needs to secure financing and wants to use their franchise rights as collateral. This document is particularly common in the United States franchise industry, where it serves as a critical tool for franchise financing. The agreement must carefully balance the rights of the lender, the ongoing operations of the franchisee, and the franchisor's interests in maintaining brand standards. It typically includes specific provisions for default scenarios, step-in rights, and requires careful consideration of both federal franchise regulations and state-specific laws. The document must also address UCC filing requirements and proper perfection of the security interest.
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1. Parties: Identification of assignor (franchisee), assignee (lender), and franchisor
2. Background/Recitals: Context of the assignment, reference to original franchise agreement and loan agreement
3. Definitions: Key terms used throughout the agreement
4. Assignment: Core provisions detailing the collateral assignment of rights
5. Franchisor Consent: Explicit consent from franchisor for the assignment
6. Rights and Obligations: Detailed explanation of parties' continuing rights and obligations
7. Default Provisions: Consequences and remedies in case of default
8. Term and Termination: Duration and conditions for termination
1. Step-In Rights: Special provisions granting lender rights to take over franchise operations in case of default
2. Insurance Requirements: Specific insurance obligations and requirements for protecting the collateral
3. Notice Requirements: Detailed procedures for providing notices between parties in various circumstances
1. Schedule A - Original Franchise Agreement: Copy of the underlying franchise agreement being assigned
2. Schedule B - Loan Agreement Reference: Summary or reference to the related loan agreement
3. Schedule C - Consent Certificate: Formal documentation of franchisor's consent
4. Schedule D - UCC Financing Statements: Copies of related UCC filings
Agreement
Assignee
Assignor
Collateral
Default Event
Effective Date
Franchise
Franchise Agreement
Franchise Rights
Franchisor
Franchise System
Loan Agreement
Obligations
Original Franchise Agreement
Permitted Assignment
Security Interest
Step-In Rights
Secured Obligations
Term
Territory
UCC
Event of Default
Intellectual Property Rights
Licensed Marks
Notice
Operating Standards
Permitted Transferee
Secured Party
Trade Secrets
Transaction Documents
Assignment and Security Interest
Consent and Acknowledgment
Representations and Warranties
Rights and Obligations
Default and Remedies
Step-In Rights
Term and Termination
Notice Requirements
Governing Law
Jurisdiction
Further Assurances
Amendments
Waiver
Severability
Integration
Relationship of Parties
Perfection and Priority
Covenants
Indemnification
Confidentiality
Assignment Restrictions
Franchisor Rights
Insurance Requirements
Enforcement Rights
Dispute Resolution
Compliance with Laws
Force Majeure
Counterparts
Third-Party Rights
Costs and Expenses
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