Preventing Conflicts Between Secured Creditors and Franchisors

A franchisor has rights and remedies that a secured creditor is not granted under the UCC, but the franchisor, by becoming a competing secured creditor, does not necessarily advance its rights and remedies in a default situation. The inter-creditor agreement and remarketing agreement are alternatives to maximize recoveries and reduce conflicts by cooperation, rather than by litigation.

9 minute read February 24, 2009 at 02:57 PM
By
Craig R. Tractenberg
Preventing Conflicts Between Secured Creditors and Franchisors

Lenders, franchisees, and franchisors all have a concern in preventing conflicts between their respective interests. The Uniform Commercial Code (“UCC”) was amended to strike a balance among the parties. However, the recent credit crisis has demonstrated that the UCC is only the starting point for the analysis.

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