Does the franchisee's insolvency affect the guarantor's liability under the Alloy personal guarantee?

According to Alloy's 2025 Franchise Disclosure Document, the guarantor's liability under the personal guarantee is not affected by the franchisee's insolvency, bankruptcy, or reorganization. The personal guarantee stipulates that the guarantor's liability will not be diminished, relieved, or otherwise affected by the franchisee's financial difficulties. This means that even if the Alloy franchisee becomes insolvent or declares bankruptcy, the guarantor remains fully responsible for the franchisee's obligations to Alloy.

This provision protects Alloy by ensuring that it can still recover any outstanding debts or enforce the terms of the Franchise Agreement, even if the franchisee is unable to meet its obligations due to financial distress. The guarantor essentially provides a financial backstop for the franchisee, assuming personal responsibility for the franchisee's debts and performance.

For a prospective Alloy franchisee, this highlights the significant risk assumed by anyone signing a personal guarantee. Before signing, potential guarantors should carefully consider the financial stability and business prospects of the franchisee, as well as their own ability to cover the franchisee's potential debts. It is advisable to seek legal and financial counsel to fully understand the implications of providing a personal guarantee for an Alloy franchise.