Does the invalidity of the Alloy Franchise Agreement affect the guarantor's liability under the personal guarantee?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
actions correspond to the terms indicated in this authorization form.
SIGNATURE DATE
Schedule D to the Franchise Agreement
PERSONAL GUARANTEE AND AGREEMENT TO BE BOUND PERSONALLY BY THE TERMS AND CONDITIONS OF THE FRANCHISE AGREEMENT
In consideration of the execution of the Franchise Agreement by us, and for other good and valuable consideration, the undersigned, for themselves, their heirs, successors, and assigns, do jointly, individually and severally hereby become surety and guarantor for the payment of all amounts and the performance of the covenants, terms and conditions in the Franchise Agreement, to be paid, kept and performed by the franchisee, including without limitation the arbitration and other dispute resolution provisions of the Agreement.
Further, the undersigned, individually and jointly, hereby agree to be personally bound by each and every condition and term contained in the Franchise Agreement, including but not limited to the noncompete provisions in subparagraph 10.D, and agree that this Personal Guarantee will be construed as though the undersigned and each of them executed a Franchise Agreement containing the identical terms and conditions of this Franchise Agreement.
The undersigned waives: (1) notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed; (2) protest and notice of default to any party respecting the indebtedness or nonperformance of any obligations hereby guaranteed;
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the personal guarantee ensures that the guarantor is bound by the terms and conditions of the Franchise Agreement. Specifically, the guarantor agrees to be personally bound by each term, including non-compete provisions, as if they had executed the Franchise Agreement themselves. This indicates a direct and comprehensive assumption of the franchisee's obligations.
However, the FDD also includes a severability clause, which states that if one or more clauses of the Franchise Agreement are deemed void or unenforceable, those clauses will be separable, and the remainder of the agreement will remain valid and in full effect. The terms of the agreement will be equitably adjusted to compensate the appropriate party for any lost consideration due to the eliminated clauses. This suggests that the invalidity of certain clauses may not necessarily invalidate the entire agreement or the personal guarantee, but rather lead to an adjustment of terms.
Furthermore, the personal guarantee explicitly covers "all amounts and the performance of the covenants, terms and conditions in the Franchise Agreement." This broad language suggests that the guarantor's liability extends to all aspects of the agreement, including financial obligations and operational requirements. The guarantor's agreement to be bound personally by the terms and conditions of the Franchise Agreement reinforces this comprehensive assumption of responsibility. Therefore, while the severability clause may address the impact of individual invalid clauses, the overall intent of the personal guarantee is to ensure the franchisor is protected.