For Aw, what is the term of the Guaranty and Assumption of Obligations?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
(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 for the term of the Franchise Agreement and continues thereafter as provided in the agreement. This means that any individual signing the Guaranty agrees to ensure the franchisee complies with all obligations outlined in the Franchise Agreement, including financial and operational requirements. This obligation remains in effect for the entire duration of the agreement.
This requirement has significant implications for prospective Aw franchisees, particularly those operating as a legal entity. In such cases, Aw requires all owners of the franchisee entity to execute the Guaranty and Assumption of Obligations. This ensures that Aw has recourse to the personal assets of the owners if the franchise fails to meet its obligations. The personal guarantee is continuing and irrevocable during the term of the Agreement.
The guarantor waives several rights, including the right to require Aw to first pursue action against the franchisee before seeking recourse from the guarantor. The guarantor also consents to joint and several liability with other guarantors and agrees that their liability will not be affected by any extensions of time or credit granted to the franchisee. This protects Aw by ensuring the personal guarantors remain fully liable even if the business structure changes or the franchisee is granted some leniency.
Franchise agreements commonly include personal guarantees, especially for franchisees operating through a corporate entity. This practice allows the franchisor to mitigate risk by ensuring that individuals with a vested interest in the franchise's success are personally liable for its performance. Prospective Aw franchisees should carefully consider the implications of the Guaranty and Assumption of Obligations and seek legal counsel to fully understand their obligations and potential liabilities.