Does the Guaranty for the Apricot Lane franchise extend beyond the term of the Franchise Agreement?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
I. Survival of Terms
All obligations of FRANCHISOR and FRANCHISEE which expressly or by their nature survive the expiration or termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding its expiration or termination if this Agreement until they are satisfied or by their specific provisions or nature expire.
SECTION 24: "FRANCHISEE" DEFINED AND GUARANTY
As used in this Agreement, the term "FRANCHISEE" shall include any and all general partners of FRANCHISEE and any and all owners (including shareholders, members, limited partners and other owners) of five percent (5%) or more beneficial or legal interest in FRANCHISEE and/or the Franchised Business, and all successors in interest of FRANCHISEE or any such individual. All such individual partners, shareholders, members and owners shall execute the Guaranty and Assumption of Obligations attached hereto as Exhibit D and made a part hereof. By their signatures thereto, all such parties acknowledge and agree to be bound by the provisions of this Agreement in the same manner and to the same extent as FRANCHISEE.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, the obligations outlined in the franchise agreement can extend beyond the agreement's termination or expiration. Section 24 of the agreement specifies that the term 'FRANCHISEE' includes all general partners and owners with a 5% or greater beneficial or legal interest in the franchise. These individuals are required to execute a Guaranty and Assumption of Obligations, as detailed in Exhibit D, binding them to the agreement's provisions.
Furthermore, Section I, titled 'Survival of Terms,' explicitly states that all obligations of both Apricot Lane and the franchisee that, by their nature, are meant to survive the termination or expiration of the agreement will remain in full effect. This continuation applies until these obligations are either satisfied, expire due to their specific terms, or expire due to their nature.
In practical terms, this means that certain responsibilities and liabilities of the franchisee, and any individual who has signed a guaranty, will continue even after the franchise agreement has ended. This could include ongoing financial obligations, adherence to non-compete clauses, or other stipulations designed to protect Apricot Lane's interests. Prospective franchisees should carefully review Exhibit D and Section I to understand the full scope of these continuing obligations and seek legal counsel to assess the potential long-term implications.