Regarding the Angry Chickz Continuing Guaranty, what does the Guarantor represent about their awareness of the Franchisee's financial condition?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
Financial Condition Of Franchisee.
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)
According to Angry Chickz's 2025 Franchise Disclosure Document, the Guarantor, under the Continuing Guaranty, makes specific representations regarding their awareness of the Franchisee's financial state. The Guarantor represents and warrants that they are fully aware of the financial condition of the Franchisee. This representation is the foundation for the Guarantor's agreement to deliver the Continuing Guaranty. The Guarantor confirms that their decision to provide the guaranty is based solely on their own independent investigation of the Franchisee's financial condition, not on any information provided by Angry Chickz.
This arrangement places the onus on the Guarantor to conduct thorough due diligence on the Franchisee's finances. It also alleviates Angry Chickz from any obligation to disclose information about the Franchisee's financial situation to the Guarantor, even if Angry Chickz possesses information that could materially increase the Guarantor's risk. The Guarantor accepts the full spectrum of risks associated with a Continuing Guaranty, including the possibility that the Franchisee may incur additional obligations or debts for which the Guarantor could be liable.
In essence, the Guarantor is entering the agreement with eyes wide open, acknowledging their responsibility to assess the Franchisee's financial stability and capacity to meet its obligations. This clause protects Angry Chickz by ensuring that the Guarantor cannot later claim ignorance of the Franchisee's financial condition as a basis for avoiding their obligations under the guaranty. Prospective franchisees should ensure that any individual acting as a guarantor understands these stipulations and has independently verified the franchisee's financial standing.