Under the Angry Chickz Continuing Guaranty, what does the Guarantor unconditionally guarantee?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
13.4.3 All present and future Owners of a 20% or more (directly or indirectly), in the aggregate, of the Equity or voting rights in Franchisee, will
execute a written guaranty in a form prescribed by Company, personally, irrevocably and unconditionally guaranteeing, jointly and severally, with all other guarantors, the full payment and performance of Franchisee's obligations to Company and to Company's Affiliates. For purposes of determining whether said 15% threshold is satisfied, holdings of spouses (and family members who live in the same household) and Affiliates shall be aggregated. Upon each transfer or assignment of an interest in Franchisee, or other change in ownership interests in Franchisee, and at any other time upon Company's request, said holders shall reexecute a written guaranty in a form prescribed by Company.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, all present and future owners of 20% or more of the equity or voting rights in the franchisee must execute a written guaranty. This guaranty ensures they personally, irrevocably, and unconditionally guarantee, jointly and severally with all other guarantors, the full payment and performance of the franchisee's obligations to Angry Chickz and its affiliates. This requirement applies to holdings of spouses, family members in the same household, and affiliates, which are aggregated to determine if the 15% threshold is met.
This means that if a franchisee fails to meet their financial or operational obligations to Angry Chickz, the guarantor(s) are legally bound to cover those obligations. The "joint and several" aspect means that each guarantor is individually liable for the entire debt, not just a portion. Angry Chickz can pursue any one guarantor for the full amount owed, regardless of the ownership percentage of that guarantor.
Furthermore, upon each transfer or assignment of an interest in the franchisee, or any other change in ownership interests, the holders must re-execute a written guaranty in a form prescribed by Angry Chickz. This ensures that the guaranty remains current and enforceable even as ownership structures change. This requirement protects Angry Chickz by ensuring that there is always a personal guarantee from the individuals with significant ownership in the franchise.
This is a fairly standard practice in franchising, as it provides an additional layer of security for the franchisor. Prospective Angry Chickz franchisees should carefully consider the implications of the Continuing Guaranty and ensure that all individuals who meet the ownership threshold are willing and able to take on this responsibility. It is advisable to seek legal counsel to fully understand the terms and conditions of the guaranty before signing.