Under the All County Guaranty, is the guarantor liable jointly and severally?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
The obligations of Franchisee and Guarantor, as described herein and in the Agreement, shall not be considered fully paid, performed and discharged unless and until all payments by Franchisee to us are no longer subject to any right on the part of any person to set aside such payments or to seek to recoup the amount of such payments. The foregoing shall include, by way of example and not by way of limitation, all rights to recover preferences voidable under Title 11 of the United States Code. If any such payments by Franchisee to us are set aside in whole or in part after being made, or are settled without litigation, to the extent of such settlement, all of which is in our business judgment, the Guarantor shall be liable, jointly and severally for the full amount of our costs, interest, attorney's fees and any and all expenses which we pay or incur in connection therewith.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 All County Franchise Disclosure Document, the guarantor is liable jointly and severally under the All County Guaranty. Specifically, the guarantor's liability extends to covering the franchisor's costs, interest, attorney's fees, and any expenses incurred if payments from the franchisee are set aside or settled without litigation. This means that All County can pursue the guarantor directly for these amounts, without first having to exhaust all remedies against the franchisee.
This provision in the All County franchise agreement is designed to protect the franchisor from financial losses resulting from the franchisee's inability to fulfill their financial obligations. The joint and several liability clause ensures that All County has recourse to recover funds, even if the franchisee's payments are later invalidated due to legal or financial challenges. This arrangement provides All County with a stronger assurance of payment and reduces the risk associated with granting a franchise.
For a prospective All County franchisee, this clause highlights the importance of understanding the full scope of the guaranty. If a franchisee defaults on payments, the guarantor will be held responsible for covering the outstanding amounts, including associated costs and fees. This could have significant financial implications for the guarantor, emphasizing the need for careful consideration before signing the guaranty agreement. It is advisable for potential guarantors to seek legal counsel to fully understand their obligations and potential liabilities under the All County Guaranty.