Can the guarantor's liability under the Alloy personal guarantee be diminished by the franchisee's bankruptcy?

According to Alloy's 2025 Franchise Disclosure Document, the personal guarantee explicitly states that the guarantor's liability will not be diminished, relieved, or otherwise affected by the franchisee's insolvency or bankruptcy. This means that even if the franchisee declares bankruptcy, the guarantor remains fully responsible for the franchisee's obligations under the Franchise Agreement. This protection extends to Alloy, ensuring they can still pursue the guarantor for any outstanding debts or unfulfilled responsibilities.

This provision is designed to protect Alloy from financial losses in the event a franchisee becomes unable to meet their obligations due to financial distress. By having a personal guarantee that is not affected by bankruptcy, Alloy has recourse to the guarantor's assets to recover any losses. This is a common practice in franchising, as it provides an additional layer of security for the franchisor.

For a prospective Alloy franchisee, this means that anyone signing a personal guarantee must understand the full extent of their financial commitment. Even if the franchisee's business fails and they declare bankruptcy, the guarantor will still be held liable. It is crucial for potential guarantors to carefully consider their financial situation and ability to cover the franchisee's obligations before signing the guarantee. They should also seek legal advice to fully understand the implications of the guarantee.