What rights does the 7 Brew guarantor waive against the franchisee as a result of the Guaranty?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
arising, will at all times be inferior and subordinate to any indebtedness owed by Franchisee to Franchisor or its affiliates.
Each of the undersigned waives: (i) all rights to payments and claims for reimbursement or subrogation which the undersigned may have against Franchisee arising as a result of the undersigned's execution of and performance under this Guaranty, for the express purpose that none of the undersigned will be deemed a "creditor" of Franchisee under any applicable bankruptcy law with respect to Franchisee's obligations to Franchisor; (ii) acceptance and notice of acceptance by Franchisor of his or her undertakings under this Guaranty, notice of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed, protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed, and any other notices and legal or equitable defenses to which he or she may be entitled; and (iii) all rights to assert or plead any statute of limitations or other limitations period as to or relating to this Guaranty. The undersigned expressly acknowledges that the obligations under this Guaranty survive expiration or termination of the Agreement.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the guarantor waives several rights against the franchisee to ensure the franchisor's financial protection. The guarantor essentially agrees to subordinate any financial claims they might have against the franchisee to 7 Brew's claims. This means that if the franchisee owes money to both the guarantor and 7 Brew, 7 Brew gets paid first. This subordination applies to any existing or future debts the franchisee owes the guarantor.
Specifically, the guarantor waives rights to payments, claims for reimbursement, or subrogation against the franchisee that arise from the guarantor fulfilling their obligations under the Guaranty. The purpose of this waiver is to prevent the guarantor from being considered a 'creditor' of the franchisee under bankruptcy law, which could complicate 7 Brew's ability to recover debts from the franchisee in case of bankruptcy. The guarantor also waives the right to receive notices, such as acceptance of the guaranty, demands for payment, or notice of default, and any legal or equitable defenses they might otherwise have.
Additionally, the guarantor waives the right to assert any statute of limitations related to the Guaranty. This means the guarantor cannot claim that 7 Brew waited too long to enforce the Guaranty. These waivers are designed to strengthen 7 Brew's position and ensure they can recover any amounts owed by the franchisee without facing legal challenges from the guarantor. The obligations outlined in the Guaranty remain in effect even after the Franchise Agreement expires or is terminated.