Can the Aw Guaranty and Assumption of Obligations be diminished by any extension of time granted to the Franchisee?
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 signed by guarantors is not affected by any extensions of time granted to the franchisee. The guarantor's liability remains intact even if Aw allows the franchisee more time, credit, or other considerations.
Specifically, the document states that the guarantor's liability will not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence that Aw may grant to the franchisee. This includes accepting partial payments or performance or compromising or releasing claims. These actions do not modify or amend the Guaranty, which remains continuous and irrevocable during the term of the agreement.
This provision protects Aw by ensuring that the guarantor remains fully responsible for the franchisee's obligations, regardless of any leniency Aw might extend to the franchisee. For a potential guarantor, this means understanding that their commitment is unwavering throughout the agreement's term, irrespective of any accommodations Aw makes for the franchisee. The guarantor should be fully aware of the franchisee's business capabilities and financial stability, as their personal assets are at risk should the franchisee default, even with extensions granted.