Under the Atwell Suites Guaranty, what does it mean for each Guarantor to be jointly and severally liable?

According to the 2025 Atwell Suites FDD, when a Guarantor agrees to be jointly and severally liable, it means each guarantor is individually responsible for the entire amount of the obligations and liabilities arising under the Guaranty, as well as jointly responsible with any other guarantors. This provides Atwell Suites with significant protection, as they can pursue any one or all of the guarantors for the full amount owed, regardless of the financial status or involvement of the other guarantors.

For a prospective Atwell Suites franchisee, this means that if they are asked to provide a Guarantor (typically for financial or operational obligations), that Guarantor is taking on a substantial risk. If the franchisee defaults on their obligations, Atwell Suites can seek the full amount due from any one of the Guarantors, even if there are multiple guarantors involved. This clause is designed to ensure that Atwell Suites has recourse to recover any losses incurred due to the franchisee's failure to meet their obligations under the License Agreement.

This type of clause is common in franchising to protect the franchisor. The guarantor cannot assume that their liability is limited to a pro-rata share or that Atwell Suites must first pursue the franchisee or other guarantors. The guarantor's assets are at risk to cover the entire debt or obligation. Therefore, anyone considering acting as a guarantor for an Atwell Suites franchise should fully understand the potential financial exposure and seek legal counsel before signing the Guaranty.

It is also important to note that the Guaranty remains in effect until all obligations are satisfied in full, and it is not affected by any discontinuance or revocation notice. The obligations of the Guarantor are independent of the Licensee's obligations, allowing Atwell Suites to bring a separate action against the Guarantor, whether or not the Licensee is involved in the action. This underscores the comprehensive and continuing nature of the Guarantor's commitment.