Does the Auntie Annes Franchisor have a duty or obligation to the Guarantors under the Guaranty?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
notices of demand for payment of any indebtedness or non-performance of any Obligations hereby guaranteed, protest, notices of dishonor, notices of default to any party with respect to the indebtedness or nonperformance of any Obligations guaranteed by Guarantors, and any other notices and legal or equitable defenses to which a Guarantor may be entitled. Franchisor shall have no present or future duty or obligation to the Guarantors under this Guaranty, and each Guarantor waives any right to claim or assert any such duty or obligation, to discover or disclose to any Guarantor any information, financial or otherwise, concerning Franchisee, any Guarantor, or any collateral securing any Obligations of Franchisee to Franchisor. Without affecting the Obligations of Guarantor under this Guaranty, Franchisor may, without notice to any Guarantor, (a) extend, modify, supplement, waive strict compliance with, or release all or any provisions of the Franchise Agreement or any indebtedness or Obligation, (b) settle, adjust, release, or compromise (including if made in or out of court on receivership, liquidation, bankruptcy, reorganization, arrangement, or assignment for the benefit of creditors) any claims against Franchisee or any Guarantor, (c) make advances for the purpose of performing any Obligations, or (d) assign the Franchise Agreement or the right to receive any sum payable under the Franchise Agreement, and the Guarantors each hereby jointly and severally waive notice of same.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the Franchisor has no present or future duty or obligation to the Guarantors under the Guaranty. Each Guarantor waives any right to claim or assert any such duty or obligation. This includes the right to discover or be disclosed any information, financial or otherwise, concerning the Franchisee, any Guarantor, or any collateral securing any obligations of Franchisee to Franchisor.
This means that as a Guarantor, you cannot expect Auntie Annes to provide you with any information about the franchisee's financial status or any collateral securing their obligations. You are also waiving your right to claim that Auntie Annes owes you any duty or obligation under the Guaranty.
Furthermore, Auntie Annes can extend, modify, supplement, waive strict compliance with, or release all or any provisions of the Franchise Agreement or any indebtedness or Obligation without notice to any Guarantor. They can also settle, adjust, release, or compromise claims against Franchisee or any Guarantor, make advances for performing any Obligations, or assign the Franchise Agreement or the right to receive any sum payable under the Franchise Agreement, and the Guarantors each hereby jointly and severally waive notice of same. This highlights the importance of understanding the full extent of your obligations and risks as a guarantor, as Auntie Annes has significant latitude in managing the franchise agreement without needing to inform or seek consent from the guarantor.
This is a significant point for potential franchisees to consider, especially those who are asked to have a guarantor for their franchise agreement. It is crucial for guarantors to fully understand that they are taking on this role without any recourse to claim duty or obligation from Auntie Annes. It is advisable to seek independent legal counsel to fully understand the implications of signing a Guaranty under these terms.