Under the Azal Coffee Guaranty, to what extent is the Guarantor bound by the Franchise Agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantor hereby agrees to and will be jointly, severally, and personally bound by all the terms and provisions of the Franchise Agreement to the same extent and in the same manner as Franchisee is bound.
This Guaranty is a continuing guaranty of payment and not of collection and remains effective whether the Indebtedness is reduced and later increased or entirely extinguished and later reincurred.
If any Indebtedness is guaranteed by two or more guarantors, the obligation of Guarantor will be several and also joint, each with all and also each with any one or more of the others, and may be enforced at the option of Franchisor against each severally, any two or more jointly, or some severally and some jointly.
Franchisor, in its sole discretion, may release any one or more of the Guarantors for any consideration that it deems adequate, and may fail or elect not to prove a claim against the estate of any bankrupt, insolvent, incompetent or deceased Guarantor; and after that, without notice to any Guarantor, Franchisor may extend or renew any or all Indebtedness and may permit Franchisee to incur additional Indebtedness, without affecting in any manner the unconditional obligation of the remaining Guarantors.
Guarantor acknowledges that the effectiveness of this Guaranty is not conditioned on any or all of the Indebtedness being guaranteed by anyone else.
Guarantor, to the extent not expressly prohibited by applicable law, waives any right to require Franchisor to: (a) proceed against any person or property; (b) give notice of the terms, time and place of any public or private sale of personal property security held from Franchisee or any other person, or otherwise comply with the provisions of Sections 9-611 or 9-621 of the Michigan or other applicable Uniform Commercial Code, as the same may be amended, revised or replaced; or (c) pursue any other remedy in Franchisor's power.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the Guarantor agrees to be jointly, severally, and personally bound by all the terms and provisions of the Franchise Agreement. This means the Guarantor is responsible to the same extent and in the same manner as the franchisee. This obligation is a continuing guaranty of payment and not of collection, remaining effective even if the debt is reduced, increased, extinguished, or reincurred.
If there are multiple guarantors, Azal Coffee can enforce the guaranty against each guarantor individually, jointly against some, or jointly and severally against others, at its discretion. Azal Coffee can release one or more guarantors for any consideration it deems adequate, without affecting the obligations of the remaining guarantors. Additionally, Azal Coffee can extend or renew any debt or allow the franchisee to incur more debt without affecting the remaining guarantors' obligations.
The Guarantor also waives certain rights, to the extent not prohibited by law, including the right to require Azal Coffee to proceed against any person or property, to give notice of the terms of any sale of personal property, or to pursue any other remedy. The Guarantor acknowledges that the effectiveness of the guaranty is not conditional on anyone else also guaranteeing the debt.
This arrangement is typical in franchising, where franchisors seek additional security to ensure financial obligations are met. Prospective Azal Coffee franchisees should carefully review the Guaranty and understand its implications, especially the extent of personal liability and the waivers of rights.