Does the Aw Guaranty and Assumption of Obligations extend to the Company's successors and assigns?
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 Guaranty and Assumption of Obligations extends to the company's successors and assigns. This means that if Rayyan Pizza Franchise LLC, referred to as "the Company" in the franchise agreement, transfers its rights or obligations to another entity, the guaranty provided by the franchisee's owners will also benefit that new entity. This ensures that Aw's interests are protected even if the company undergoes changes in ownership or structure.
For a prospective Aw franchisee, this clause has significant implications. If the franchisee is an entity (like a corporation or LLC), the owners must personally guarantee the franchisee's obligations. This guarantee is not just for the benefit of the current franchisor, Rayyan Pizza Franchise LLC, but also for any future entity that takes over the franchisor's role. Therefore, the personal liability of the owners extends beyond the original franchisor and remains in effect for the duration of the franchise agreement.
The Guaranty and Assumption of Obligations ensures that Aw, and any successor, has recourse to the personal assets of the franchisee's owners if the franchise fails to meet its financial or operational obligations. This is a common practice in franchising, as it provides an additional layer of security for the franchisor's investment and brand. Franchisees should carefully consider this personal guarantee and its implications before entering into a franchise agreement with Aw.
It is important for potential franchisees to fully understand the terms of the Guaranty and Assumption of Obligations, including the specific obligations being guaranteed and the circumstances under which the guarantee can be invoked. Franchisees should seek legal counsel to review the franchise agreement and the guaranty to ensure they are fully aware of their responsibilities and potential liabilities.