Is the Aw Guaranty and Assumption of Obligations continuing and irrevocable during the term of the Agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the undersigned consents and agrees that: (1) his direct and immediate liability under this Guaranty will be joint and several with all other current and future guarantors of Franchisee's obligations; (2) he will render any payment or performance required under the Agreement upon demand if Franchisee fails or refuses punctually to do so; (3) such liability will not be contingent or conditioned upon pursuit by the Company of any remedies against Franchisee or any Other person; (4) such liability will not be diminished, relieved or otherwise affected by any extension of time, credit or other indulgence which the Company may from time to time grant to Franchisee or to any Other person, including without limitation, the acceptance of any partial payment or performance, or the compromise or release of any claims, none of which will in any way modify or amend this Guaranty, which will be continuing and irrevocable during the term of the Agreement; and (5) this Guarantee shall apply to any amounts recovered from Company as a preference, fraudulent transfer or otherwise in a bankruptcy or similar proceeding.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the Guaranty and Assumption of Obligations is indeed continuing and irrevocable during the term of the Franchise Agreement. This means that any individual who signs the guaranty is bound to its terms for the entire length of the agreement, and cannot cancel or withdraw from it. This obligation extends to ensuring the franchisee's performance of all agreements and covenants outlined in the Franchise Agreement.
Specifically, the guarantor is responsible for ensuring the franchisee punctually pays and performs every undertaking, agreement, and covenant detailed in the agreement. The guarantor also agrees to be personally bound by and liable for any breaches of the agreement, including monetary obligations and specific actions or activities the franchisee must undertake or refrain from. This creates a direct and immediate liability for the guarantor, jointly and severally with any other guarantors.
This arrangement protects Aw by providing an additional layer of security that the franchisee will meet its obligations. It also means that Aw does not need to pursue remedies against the franchisee before seeking fulfillment from the guarantor. The guarantor's liability remains even if Aw grants extensions of time, credit, or other indulgences to the franchisee. This ensures Aw's interests are protected throughout the franchise relationship.
For a prospective Aw franchisee, this highlights the importance of carefully considering who will act as a guarantor, as that individual will be held responsible for the franchisee's obligations. The guarantor should fully understand the terms of the Franchise Agreement and the potential financial and operational commitments they are guaranteeing. This continuing and irrevocable nature of the guaranty underscores the seriousness of the commitment for all parties involved.