If the 7 Brew franchisee transfers any interest in the Agreement, does the Guaranty remain in effect?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the undersigned consents and agrees that: (1) his or her direct and immediate liability under this Guaranty will be joint and several, both with Franchisee and among other guarantors; (2) he or she will render any payment or performance required under the Agreement upon demand if Franchisee fails or refuses punctually to do so; (3) this liability will not be contingent or conditioned upon Franchisor's pursuit of any remedies against Franchisee or another person; (4) this liability will not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence Franchisor may from time to time grant to Franchisee or to another person, including, without limitation, the acceptance of any partial payment or performance or the compromise or release of any claims (including, without limitation, any release of other guarantors), none of which will in any way modify or amend this Guaranty, which will continue and be irrevocable during the term of the Agreement (including, without limitation, any extensions of its term) and afterward for so long as any performance is or might be owed under the Agreement by Franchisee or any of its owners and for so long as Franchisor has any cause of action against Franchisee or any of its owners; (5) this Guaranty will continue in full force and effect for (and as to) any extension or modification of the Agreement and despite the transfer of any interest in the Agreement or Franchisee, and each of the undersigned waives notice of any and all renewals, extensions, modifications, amendments, or transfers; and (6) any Franchisee indebtedness to the undersigned, for whatever reason, whether currently existing or hereafter
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the Guaranty and Assumption of Obligations agreement remains in full force even if there is a transfer of interest in the Franchise Agreement or the franchisee. The guarantor waives any notice of renewals, extensions, modifications, amendments, or transfers related to the agreement. This ensures that the obligations outlined in the Guaranty remain in effect regardless of changes in ownership or the terms of the Franchise Agreement.
This provision protects 7 Brew by ensuring that the financial obligations and responsibilities guaranteed by the guarantor are not nullified by a transfer of the franchise. The guarantor's liability continues for the duration of the agreement, including any extensions, and afterward, as long as there are outstanding obligations or potential causes of action against the franchisee or its owners. The guarantor also agrees that any debt owed to them by the franchisee is subordinate to the franchisee's debt to 7 Brew.
For a prospective 7 Brew franchisee, this means that if they are considering transferring their franchise, any existing guarantees will remain in effect. Individuals acting as guarantors should understand that their obligations will persist even after a transfer, and they should seek legal counsel to fully understand the implications. This clause is designed to provide financial security to 7 Brew and maintain consistent accountability regardless of changes in the franchisee's ownership or operational structure.