What is guaranteed under the Guaranty and Assumption of Obligations for an Americas Best Value Inn franchise?
Americas_Best_Value_Inn Franchise · 2025 FDDAnswer from 2025 FDD Document
THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given as of , by the undersigned. In consideration of, and as an inducement to, the execution of that certain Franchise Agreement (as amended, modified, restated or supplemented from time to time, the "Franchise Agreement") on this date by SONESTA RL HOTELS FRANCHISING INC. ("we"), and, if Franchisee (defined below) and we are parties to an Initial Fee Promissory Note and/or an Incentive Promissory Note in connection with the Franchise Agreement (as amended, modified, restated or supplemented from time to time, the "Note(s)" and together with the Franchise Agreement referred to as the "Agreements"), as consideration for the Note(s), each of the undersigned personally and unconditionally (a) guarantees to us and our successors and assigns, for the Term of the Agreements and afterward as provided in the Agreements, that ("Franchisee") will punctually pay and perform each and every undertaking, agreement, and covenant set forth in the Agreements and (b) agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Agreements, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including the non-competition, confidentiality, and transfer requirements.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to the 2025 Franchise Disclosure Document, the Guaranty and Assumption of Obligations ensures that the franchisee will fulfill all obligations outlined in the Franchise Agreement. This means that a guarantor personally guarantees that the Americas Best Value Inn franchisee will punctually pay and perform every undertaking, agreement, and covenant detailed in the Agreements. The guarantor also agrees to be personally bound by, and personally liable for any breaches of the agreement. This includes both monetary obligations and the responsibility to take or avoid specific actions, such as adhering to non-competition, confidentiality, and transfer requirements.
Under this agreement, the guarantor's liability is direct, immediate, joint, and several with the franchisee and any other guarantors. If the franchisee fails to meet their obligations, the guarantor is required to step in and fulfill them upon demand. This responsibility is not contingent upon Americas Best Value Inn pursuing remedies against the franchisee or any other party first. The guarantor's liability remains unchanged even if the franchisor grants extensions of time, credit, or other indulgences to the franchisee, or if bankruptcy occurs.
The guarantor also waives certain rights, including rights to payments and claims for reimbursement or subrogation against the franchisee. They also waive the right to certain notices, such as acceptance of the guaranty, demand for payment, or notice of default. The guarantor is responsible for reimbursing Americas Best Value Inn for all costs and expenses incurred in enforcing the terms of the Guaranty. If the guarantor is a business entity, retirement or investment account, or trust, they agree that no dividends or distributions may be made to their owners, accountholders, or beneficiaries if the franchisee is delinquent in payment of any guaranteed amounts, subject to applicable law.