In the Aw Guaranty and Assumption of Obligations, what is the effect of the Company accepting partial payment from 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 acceptance of partial payment from the franchisee does not diminish the liability of the guarantor. The guarantor's liability will not be reduced or otherwise affected if Aw accepts partial payment.
Specifically, the Guaranty and Assumption of Obligations agreement ensures that the guarantor's obligations remain intact even if Aw provides leniency to the franchisee. This includes extensions of time, credit, or acceptance of partial payments. The guarantor remains fully liable under the terms of the agreement, and the guaranty remains continuing and irrevocable during the term of the Franchise Agreement.
This clause protects Aw by ensuring that the guarantor's obligations are not weakened by any accommodations Aw might make to the franchisee. For a prospective Aw franchisee, this means that anyone signing a guaranty on their behalf should be fully aware that their obligations are not lessened even if Aw accepts less than the full amount owed by the franchisee at any given time.