Does the 1-800-GOT-JUNK? Guarantor's obligation include costs for the Franchisor's counsel's expenses?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) guaranty the full and punctual payment and performance of all present and future obligations, liabilities, covenants and agreements required to be observed and performed or paid or reimbursed by the Guarantor under or relating to the Franchise Agreement, plus all costs, expenses and fees (including the reasonable fees and expenses of the Franchisor's counsel) in any way relating to the enforcement or protection of Franchisor's rights hereunder, including without limitation, (i) royalty, minimum royalty, marketing royalty, amounts owing for products and inventory purchased by the Franchisee, rent, additional rent, monies, charges and other amounts of any kind whatsoever payable by the Franchisee to the Franchisor pursuant to any agreements or dealings between the Franchisee and the Franchisor, and (ii) t
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, the Guarantor's obligations include covering the franchisor's legal expenses. Specifically, the guarantor is responsible for the full and punctual payment and performance of all present and future obligations, liabilities, covenants, and agreements required of the franchisee. This extends to all costs, expenses, and fees, including the reasonable fees and expenses of 1-800-GOT-JUNK?'s counsel. These expenses must relate to the enforcement or protection of 1-800-GOT-JUNK?'s rights under the franchise agreement.
This obligation includes, but isn't limited to, royalty, minimum royalty, marketing royalty, amounts owed for products and inventory purchased by the franchisee, rent, additional rent, monies, charges, and other amounts payable by the franchisee to 1-800-GOT-JUNK?. This means that if 1-800-GOT-JUNK? incurs legal costs to enforce the franchisee's obligations to pay these amounts, the guarantor is responsible for covering those legal costs as well.
For a prospective 1-800-GOT-JUNK? franchisee, this highlights the importance of the guarantor's financial stability and understanding of the franchise agreement. The guarantor should be fully aware of the potential financial obligations they are undertaking, which extend beyond the franchisee's direct debts to include legal expenses incurred by 1-800-GOT-JUNK? in enforcing the agreement. This could represent a significant financial risk for the guarantor, depending on the nature and extent of any disputes that may arise during the franchise term.