Does the Alloy personal guarantee extend to the guarantor's heirs, successors, and assigns?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the personal guarantee does extend to the guarantor's heirs, successors, and assigns. The document specifies that the undersigned, which refers to the guarantor, includes "themselves, their heirs, successors, and assigns" when becoming surety and guarantor for the franchisee's obligations under the Franchise Agreement. This means that the obligations of the personal guarantee are not extinguished upon the death or transfer of interest of the guarantor, but instead, are transferred to their heirs, successors, or assigns.
This provision has significant implications for potential Alloy franchisees and those acting as guarantors. Heirs, successors, and assigns could become responsible for the franchisee's debts and obligations under the Franchise Agreement. This includes the payment of all amounts owed and the performance of all covenants, terms, and conditions outlined in the agreement.
Furthermore, the personal guarantee extends to being personally bound by each term and condition in the Franchise Agreement, including non-compete provisions. This means that the heirs, successors, and assigns are also subject to these terms as if they had executed the Franchise Agreement themselves.
Prospective franchisees and guarantors should carefully consider the implications of this extended personal guarantee. It is advisable to seek legal counsel to fully understand the scope of the obligations and potential liabilities that could be passed on to heirs, successors, and assigns. This is a fairly standard clause in franchise agreements, but its implications should be carefully considered.