What is the duration of the guarantee provided to the Company by the guarantor under the Aw franchise agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this day of , 20, by |
|---|
| In consideration of, and as an inducement to, the execution of that certain Franchise |
| Agreement of even date herewith (the "Agreement") by Rayyan Pizza Franchise LLC (the |
| "Company"), each of the undersigned hereby personally and unconditionally, jointly and severally: |
| (a) guarantees to the Company, and its successors and assigns, for the term of the Agreement and |
| thereafter |
| as |
| provided |
| in |
| the |
| Agreement, |
| that |
| ("Franchisee") will punctually |
| pay and perform each and every undertaking, agreement and covenant set forth in the Agreement; |
| and (b) agrees to be personally bound by, and personally liable for the breach of, each and every |
| provision in the Agreement, both monetary obligations and obligations to take or refrain from taking |
| specific actions or to engage or refrain from engaging in specific activities. |
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the guarantee provided to the Company by the guarantor extends for the term of the franchise agreement and continues thereafter as provided in the agreement. This means that the guarantor's obligations are tied to the length of the franchise agreement itself.
This has significant implications for potential Aw franchisees, particularly those who rely on a guarantor to meet the financial or operational requirements of the franchise. The guarantor is responsible for ensuring the franchisee adheres to all terms, agreements, and covenants outlined in the franchise agreement, including monetary obligations and specific actions or activities.
The guarantor's obligations are not limited to the initial term of the agreement. They extend beyond the initial term as specified in the agreement. This could include ongoing responsibilities related to post-termination obligations, such as non-compete clauses or payment of outstanding debts. Therefore, potential franchisees and their guarantors should carefully review the franchise agreement to understand the full scope and duration of the guarantee, including any post-term obligations.
It is important to note that the guarantor also waives certain rights, such as the right to demand that the Company first pursue action against the franchisee before seeking recourse from the guarantor. The guarantor's liability is joint and several with other guarantors, meaning Aw can pursue any guarantor for the full amount of the obligation. The guarantee remains in effect even if Aw grants extensions or indulgences to the franchisee, and it applies to amounts recovered from Aw in bankruptcy proceedings.