What defenses and setoffs does the Guarantor waive under the Azal Coffee Guaranty?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantor waives notice of acceptance of this Guaranty and presentment, demand, protest, notice of protest, dishonor, notice of dishonor, notice of default, notice of intent to accelerate or demand payment of any Indebtedness, any and all other notices to which Guarantor might otherwise be entitled, and diligence in collecting any Indebtedness, and agrees that Franchisor may, once or any number of times, modify the terms of any Indebtedness, compromise, extend, increase, accelerate, renew, or forbear to enforce payment of any or all Indebtedness, or permit Franchisee to incur additional Indebtedness, all
without notice to Guarantor and without affecting in any manner the unconditional obligation of Guarantor under this Guaranty.
Guarantor unconditionally and irrevocably waives each and every defense and setoff of any nature which, under principles of guaranty or otherwise, would operate to impair or diminish in any way the obligation of Guarantor under this Guaranty, and acknowledges that each waiver is by this reference incorporated into each security agreement, collateral assignment, pledge and/or other document from Guarantor now or later securing this Guaranty and/or the Indebtedness, and acknowledges that as of the date of this Guaranty no defense or setoff exists.
This Guaranty is an absolute and continuing guarantee and will remain in effect unless revoked in writing by Franchisor.
As long as Franchisee owes any monies to Franchisor (other than payments that are not past due) Franchisee will not pay and Guarantor will not accept payment of any part of any Indebtedness owed by Franchisee to us, or any one of us, either directly or indirectly, without the consent of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to the 2024 Azal Coffee Franchise Disclosure Document, the Guarantor waives several rights and defenses related to the franchise agreement. The Guarantor waives notice of acceptance of the Guaranty, presentment, demand, protest, notice of protest, dishonor, notice of default, notice of intent to accelerate or demand payment of any Indebtedness, and any other notices they might otherwise be entitled to. They also waive diligence in collecting any Indebtedness. This means the Guarantor will not be informed of these actions related to the debt. Azal Coffee can modify the terms of any Indebtedness, compromise, extend, increase, accelerate, renew, or forbear to enforce payment of any or all Indebtedness, or permit Franchisee to incur additional Indebtedness, all without notice to Guarantor and without affecting in any manner the unconditional obligation of Guarantor under this Guaranty.
The Guarantor also waives every defense and setoff of any nature that would impair or diminish their obligation under the Guaranty. This waiver is incorporated into any security agreement, collateral assignment, pledge, or other document securing the Guaranty or the Indebtedness. The Guaranty is an absolute and continuing guarantee that remains in effect unless revoked in writing by Azal Coffee. As long as the Franchisee owes any monies to Azal Coffee (other than payments that are not past due), the Franchisee will not pay, and the Guarantor will not accept payment of any Indebtedness owed by the Franchisee to them without Azal Coffee's consent.
In essence, these waivers significantly limit the Guarantor's ability to challenge or reduce their obligations under the Guaranty. This is a common practice in franchising to ensure that the franchisor has a clear and enforceable claim against the Guarantor in case of the franchisee's default. Prospective franchisees should ensure that any individual acting as a guarantor fully understands these waivers and the potential financial risks involved.