Does the personal guaranty for a Bang Cookies franchise survive the termination, expiration, or transfer of the Franchise Agreement?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
You agree that: (a) your direct and immediate liability under this guaranty shall be joint and several with Franchisee and all other signatories to this Agreement; (b) you will render any payment required under the
Franchise Agreement and the Ancillary Agreements upon demand if Franchisee fails or refuses punctually to do so; (c) your liability shall not be contingent or conditioned upon pursuit by us of any remedies against Franchisee or any other person; and (d) liability shall not be diminished, relieved or otherwise affected by any extension of time, credit or other indulgence that we may grant to Franchisee or to any other person, including the acceptance of any partial payment or performance, or the compromise or release of any claims, none of which shall in any way modify or amend this guarantee, which shall be continuing and irrevocable during the term of each of the Franchise Agreement and the Ancillary Agreements and following the termination, expiration or Transfer of each of the Franchise Agreement and the Ancillary Agreements to the extent any financial obligations under any such Franchise Agreement and Ancillary Agreements survive such termination, expiration or Transfer. This guaranty will continue unchanged by the occurrence of any bankruptcy with respect to Franchisee or any assignee or successor of Franchisee or by any abandonment of one or more of the Franchise Agreement and/or and Ancillary Agreements by a trustee of Franchisee. Neither your obligation to make payment in accordance with the terms of this undertaking nor any remedy for enforcement shall be impaired, modified, changed, released or limited in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Franchisee or its estate in bankruptcy or of any remedy for enforcement, resulting from the operation of any present or future provision of the U.S. Bankruptcy Act or other statute, or from the decision of any court or agency.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the personal guaranty associated with the Franchise Agreement and Ancillary Agreements remains in effect even after the termination, expiration, or transfer of the agreement. This means that the guarantor's obligations continue to the extent that any financial obligations under the Franchise Agreement and Ancillary Agreements survive such termination, expiration, or transfer. The guaranty remains effective regardless of bankruptcy involving the franchisee or any assignee or successor, or abandonment of the Franchise Agreement or Ancillary Agreements by a trustee of the franchisee.
Specifically, the guarantor's liability is direct, immediate, joint, and several with the franchisee and all other signatories. The guarantor is obligated to make any payment required under the Franchise Agreement and Ancillary Agreements upon demand if the franchisee fails to do so. This liability is not contingent upon Bang Cookies pursuing remedies against the franchisee or any other person. Furthermore, the guarantor's liability is not diminished or affected by any extensions of time, credit, or other allowances granted to the franchisee, including acceptance of partial payments or compromise of claims.
This clause ensures that Bang Cookies retains financial protection even if the franchise changes hands or ceases operations. For a prospective franchisee, this means that the personal guaranty is a significant and long-lasting commitment. It is crucial to understand the full scope of the financial obligations that could survive the termination, expiration, or transfer of the franchise, as the guarantor remains liable for these amounts. Franchisees should seek legal counsel to fully understand the implications of this clause before signing the Franchise Agreement and related documents.