What happens if the Guarantor for an Angry Chickz franchise has a claim against the Franchisee?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor subordinates any and all indebtedness of Franchisee to Guarantor to the full and prompt payment and performance of all of the Obligations.
Franchisor shall be entitled to receive payment of all Obligations prior to Guarantor's receipt of payment of any amount of any indebtedness of Franchisee to Guarantor.
Guarantor will not exercise any rights which it may acquire by way of subrogation under this Continuing Guaranty, by any payment hereunder or otherwise, until all of the Obligations have been paid in full, in cash, and Franchisor shall have no further obligations to Franchisee under the Obligations or otherwise.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, if the Guarantor has any indebtedness claims against the Franchisee, the Guarantor's rights are subordinated to Angry Chickz's rights to receive full payment and performance of all obligations. This means Angry Chickz is entitled to receive payments for all obligations before the Guarantor receives any payment from the Franchisee regarding any debt owed to the Guarantor.
Furthermore, the Guarantor cannot exercise any rights of subrogation under the Continuing Guaranty until all obligations to Angry Chickz are paid in full, in cash, and Angry Chickz no longer has any obligations to the Franchisee. Subrogation refers to the Guarantor's right to step into Angry Chickz's shoes to collect debts from the Franchisee after fulfilling the guarantee. However, this right is suspended until Angry Chickz has been fully satisfied.
In practical terms, this clause protects Angry Chickz by ensuring that its financial interests are prioritized over any financial claims the Guarantor might have against the Franchisee. This is a common practice in franchising to safeguard the franchisor's revenue streams and ensure the stability of the franchise system. A prospective franchisee should understand that any personal loans or financial arrangements involving a guarantor will be secondary to the financial obligations outlined in the franchise agreement with Angry Chickz.