What is the significance of the phrase 'jointly and severally' in the Aw Guaranty and Assumption of Obligations?
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 | | 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 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
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the phrase 'jointly and severally' within the Guaranty and Assumption of Obligations has significant implications for franchisees, particularly those operating as entities. This clause means that each individual signing the guaranty is independently liable for the full extent of the franchisee's obligations to Aw. Aw can pursue any one guarantor for the entire debt or obligation, regardless of whether other guarantors exist or their ability to pay. This provides Aw with a stronger position, as they are not required to pursue all guarantors simultaneously or proportionally.
This clause is particularly relevant when the franchisee is a business entity, such as a corporation or LLC. In such cases, Aw requires all owners of the franchisee entity to execute the Guaranty and Assumption of Obligations. The 'jointly and severally' clause ensures that Aw can seek recourse from any or all of the owners individually for the entire debt, rather than being limited to the assets of the business entity itself. This personal guarantee mitigates Aw's risk, as it ensures that individuals with a vested interest in the franchise's success are personally liable for its performance.
Furthermore, the guarantor waives several rights, including the right to require Aw to first pursue action against the franchisee or any other person before seeking recourse from the guarantor. The guarantor also consents to their liability being joint and several with all other current and future guarantors, and agrees that their liability will not be diminished by any extensions of time or credit granted to the franchisee. This comprehensive waiver and consent underscores the strength of the guaranty and the extent of the guarantor's personal liability to Aw.