Is the Angry Chickz 'Continuing Guaranty' a guaranty of collection or of payment and performance when due?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor represents and warrants that it is fully aware of the financial condition of Franchisee, and Guarantor delivers this Continuing Guaranty based solely upon its own independent investigation of Franchisee's financial condition.
Guarantor waives any duty on the part of Franchisor to disclose to Guarantor any facts it may now or hereafter know about Franchisee, regardless of whether Franchisor has reason to believe that any such facts materially increase the risk beyond that which Guarantor intends to assume or has reason to believe that such facts are unknown to Guarantor.
Guarantor knowingly accepts the full range of risk encompassed within a contract of "Continuing Guaranty" which includes, without limitation, the possibility that Franchisee will contract for additional obligations and indebtedness for which Guarantor may be liable hereunder.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
Based on the 2025 Angry Chickz Franchise Disclosure Document, the Continuing Guaranty appears to function as a guarantee of payment and performance. Several clauses within the agreement emphasize the guarantor's immediate and primary obligation to ensure the franchisee's duties are fulfilled.
Specifically, the guarantor waives several rights that would typically protect them, such as requiring Angry Chickz to first attempt collection from the franchisee before pursuing the guarantor. The guarantor also acknowledges being fully aware of the franchisee's financial condition and accepts the risk that the franchisee may incur additional obligations for which the guarantor will be liable. These waivers and acknowledgments suggest that Angry Chickz can demand payment or performance directly from the guarantor without first exhausting all remedies against the franchisee.
Furthermore, the subordination clause stipulates that any debt the franchisee owes to the guarantor is secondary to the franchisee's obligations to Angry Chickz. This means Angry Chickz is entitled to receive full payment before the guarantor can recover any debts from the franchisee. The guarantor also waives rights to subrogation until all obligations to Angry Chickz are satisfied, reinforcing the primary nature of the guarantee. These provisions indicate that Angry Chickz intends the Continuing Guaranty to be a direct and immediate assurance of payment and performance, rather than a guarantee of collection that requires them to first pursue the franchisee.
Prospective Angry Chickz franchisees should carefully review the Continuing Guaranty with their legal advisors to fully understand the implications of these waivers and obligations. Understanding the full scope of the financial and performance responsibilities is crucial before signing the franchise agreement.