Does the indemnification obligation in the 360 Painting franchise agreement continue after the agreement expires or terminates?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of, and as an inducement to, the execution by 360 Painting, LLC ("Franchisor") of that certain 360 Painting, LLC Franchise Agreement, dated (as the same from time to time may be amended, modified, extended or renewed, the "Franchise Agreement"), by and between ("Franchisee") and Franchisor, the undersigned ("Guarantor"), for the term of the Franchise Agreement and any extension or renewal thereof, and thereafter until all obligations of Franchisee to Franchisor have been satisfied, jointly and severally, do hereby personally, absolutely, and unconditionally guarantee that Franchisee shall punctually pay and perform each and every undertaking, condition, and covenant set forth in the Franchise Agreement. Guarantor further waives acceptance and notice of acceptance of the foregoing obligations of Franchisee, and any right the undersigned may have to require that an action be brought against Franchisee or any other person as a condition to the liability of Guarantor.
This Guaranty is a guarantee of payment and performance not merely one of collection. Guarantor further consents and agrees that its liability under this Guaranty shall be direct and immediate and joint and several; that Guarantor shall render any payment or performance required under the Franchise Agreement upon demand if Franchisee fails or refuses punctually to do so; that such liability shall not be contingent or conditioned upon the pursuit of any remedies against Franchisee or any other person; and that such liability shall not be diminished, relieved or otherwise affected by the extension of time, credit or any other indulgence which Franchisor, its affiliates, successors or assigns may, from time to time, grant to Franchisee or to any other person, including, without limitation, the acceptance of any partial payment or performance, or the compromise or release of any claims, or the release of any one or more Guarantors hereunder, or the consent to assignment of any interest in Franchisee, none of which shall in any way modify or amend this Guaranty, which shall be continuing and irrevocable until all obligations of Franchisee to Franchisor have been satisfied.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
The 2025 360 Painting Franchise Disclosure Document includes a Guaranty Agreement that addresses obligations after the termination or expiration of the Franchise Agreement. According to the Guaranty Agreement, the guarantor is liable for the term of the Franchise Agreement and any extensions or renewals. This liability extends beyond the agreement's term until all of the franchisee's obligations to 360 Painting have been fully satisfied.
Specifically, the guarantor guarantees that the franchisee will punctually pay and perform every undertaking, condition, and covenant in the Franchise Agreement. The guarantor waives the right to require 360 Painting to first bring an action against the franchisee or any other person before enforcing the guaranty. This ensures that 360 Painting can directly pursue the guarantor for any of the franchisee's unfulfilled obligations.
The Guaranty Agreement clarifies that it is a guarantee of payment and performance, not merely of collection, meaning the guarantor's liability is direct, immediate, and joint and several. The guarantor's obligations are not contingent upon 360 Painting pursuing remedies against the franchisee first. Furthermore, the guarantor's liability remains unaffected by any extensions of time, credit, or other indulgences that 360 Painting may grant to the franchisee. The guaranty remains continuing and irrevocable until all obligations of the franchisee to 360 Painting are satisfied.