What is the scope of the obligations covered by the Guaranty and Assumption of Obligations for an Aw franchise?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Each of the undersigned waives: (1) acceptance and notice of acceptance by the Company of the foregoing undertakings; (2) notice of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed; (3) protest and notice of default to any party with respect to the indebtedness or non-performance of any obligations hereby guaranteed; (4) any right he may have to require that an action be brought against Franchisee or any other person as a condition of liability; and (5) any and all other notices and legal or equitable defenses to which he may be entitled.
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 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 32–33)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the Guaranty and Assumption of Obligations agreement ensures that if the franchisee is an entity, the owners personally guarantee the franchisee's obligations under the Franchise Agreement. This guarantee extends to all provisions of the agreement, including both monetary obligations and requirements to take or refrain from specific actions or activities. The "Guaranty and Assumption of Obligations" is included as an exhibit to the Franchise Agreement.
Specifically, the guarantor agrees to ensure the franchisee punctually pays and performs every undertaking, agreement, and covenant outlined in the Franchise Agreement. The guarantor also agrees to be personally bound by and liable for any breach of the agreement, covering both financial responsibilities and obligations related to specific actions or activities. This obligation remains in effect for the entire term of the Franchise Agreement and any extensions thereafter.
The guarantor waives several rights, including the need for the Company to notify them of acceptance, demand payment, or provide notice of default. They also waive the right to require the Company to first pursue action against the franchisee before seeking recourse from the guarantor. The guarantor's liability is joint and several with other guarantors, meaning each guarantor is fully responsible for the entire obligation. The guarantee remains in effect even if the Company grants extensions or compromises with the franchisee, and it applies to any amounts recovered from the Company in bankruptcy proceedings.
This comprehensive guarantee is a standard practice in franchising, designed to protect Aw by ensuring that there are individuals personally liable for the performance of the franchise, especially when the franchisee is a business entity. Prospective Aw franchisees should carefully review the Guaranty and Assumption of Obligations exhibit to fully understand the scope of their personal liability and obligations.