Is the All States M.E.D. franchise agreement considered personal to the franchisee?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
| THIS UNLIMITED GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this day |
|---|
| of, 20 |
| , by |
| In consideration of, and as an inducement to, the execution of that certain Franchise Agreement |
| dated |
| herewith ("Agreement") by All States M.E.D. Franchising, LLC |
| ("Franchisor"), each |
| of the undersigned hereby personally and unconditionally guarantees to Franchisor and its successors and |
| assigns, for the term of the Agreement and thereafter as provided in the Agreement, that |
| ("Franchisee") shall punctually pay and perform each and every undertaking, agreement |
| and covenant in |
| the Agreement. Each of the undersigned shall be personally bound by, and personally liable |
| for, Franchisee's breach of any provision in the Agreement, including those relating to monetary obligations |
| and obligations to take or refrain from taking specific actions or engaging in specific activities, such as |
| those contemplated by Sections 6, 7, and 17 of the Agreement. Each of the undersigned waives: (a) |
| acceptance and notice of acceptance by Franchisor of the foregoing undertakings; (b) notice of demand for |
| payment of any indebtedness or non-performance of any obligations hereby guaranteed; (c) protest and |
| notice of default to any party with respect to the indebtedness or non-performance of any obligations hereby |
| guaranteed; (d) any right it may have to require that an action be brought against Franchisee or any other |
| person as a condition of liability; and (e) any and all other notices and legal or equitable defenses to which |
| it may be entitled. |
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
The 2024 All States M.E.D. Franchise Disclosure Document includes a section where an individual guarantees the franchisee's obligations. This Unlimited Guaranty and Assumption of Obligations indicates that someone other than the franchisee may be personally guaranteeing the franchisee's performance under the agreement.
Specifically, the guarantor agrees to ensure the franchisee punctually pays and performs every undertaking, agreement, and covenant within the Franchise Agreement. This personal guaranty extends for the entire term of the agreement and beyond, as specified in the agreement. The guarantor is personally bound by any breach of the agreement by the franchisee, including monetary obligations or specific actions required or prohibited by Sections 6, 7, and 17 of the agreement.
The guarantor also waives several rights, including the right to receive notice of acceptance, demand for payment, or default. They also waive the right to require the All States M.E.D. to first bring an action against the franchisee before pursuing the guarantor. This arrangement suggests that the financial and operational responsibilities of the franchise are not solely tied to the franchisee entity but are also backed by the personal commitment of the guarantor.
Prospective All States M.E.D. franchisees should carefully review the implications of this guaranty, understand the sections of the agreement it references (6, 7, and 17), and assess the financial and operational risks associated with the franchise. They should also consider the impact on the guarantor and ensure that the guarantor fully understands the extent of their obligations and waived rights.