What obligation does the Individual have to the Franchisee's performance under the Bevaris Alliance agreement?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
- 22.1 In consideration of the Franchisor entering into this agreement with the Franchisee, the Individual, as primary obligor, irrevocably and unconditionally as separate and independent obligations:
- (a) guarantees the full, prompt and complete performance by the Franchisee of each of its obligations under this agreement and the Food Service Agreements;
(b) guarantees the punctual payment of all sums payable by the Franchisee under this agreement or in consequence of any breach of the provisions of this agreement;
(c) undertakes, immediately on demand, to perform or procure the performance of all the Franchisee's obligations referred to in clause 22.1(a) and clause 22.1(b); and
(d) undertakes to pay to the Franchisor, immediately on demand and unconditionally, such sum to make good all losses, damage, costs and expenses arising out of the Franchisee's failure to perform such obligations, or pay such sums on the due date, or the Individual's failure to comply with the provisions of clause 22.1(a), clause 22.1(b) and clause 22.1(c).
22.2 Before making a demand under clause 22.1, it shall not be necessary for the Franchisor to have made a demand on, taken out proceedings against, or taken any action to enforce any security against the Franchisee or any other person.
22.3 The Individual's liability under this clause 22 shall be joint and several and shall not be reduced, discharged or adversely affected in any way, by:
(a) any unenforceability, invalidity, irregularity, frustration or discharge by operation of law of any of the Franchisee's obligations under this agreement; or
(b) any legal limitation, disability, incapacity or other circumstances relating to the Franchisee or any other person; or
(c) the Franchisor compromising, varying, extending, dealing with, renewing, releasing, refusing or neglecting to perfect or enforce any right, remedy or security against the Franchisee or any other person in respect of this agreement or any other document or security; or
(d) anything which, but for this provision, might discharge, reduce or extinguish any of the Individual's liabilities under this clause 22.
22.4 The Individual's guarantee is a continuing guarantee and shall continue in effect until the Franchisee has paid and performed all sums and all obligations under this agreement.
22.5 The Individual shall not, until all of the Franchisee's obligations under this agreement have been finally performed and paid in full, exercise any right:
(a) of subrogation and indemnity; or
(b) to take the benefit of, share in or enforce any security or other guarantee or indemnity for any of the Franchisee's obligations; or
(c) to prove in the liquidation of the Franchisee, other than in accordance with the Franchisor's instructions.
22.6 If the Individual exercises any of the rights referred to in clause 22.5, he or she shall:
- (a) hold any amounts recovered on trust for the Franchisor; and
- (b) pay them to the Franchisor on demand.
- 22.7 During the Term, the Individual shall:
- (a) assure that the Franchisee performs all its obligations under this agreement;
- (b) devote his full-time attention and effort to the Franchisee's Business;
- (c) be a director, officer, or managing member of the Franchisee; and
- (d) hold, in his or her own name, more than 50% of the issued voting capital of the Franchisee.
- 22.8 The Individual may not assign or transfer any of his rights or obligations under this agreement.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 Bevaris Alliance Franchise Disclosure Document, an Individual who signs the franchise agreement on behalf of the Franchisee has specific obligations to ensure the Franchisee's performance. The Individual guarantees the Franchisee's full and prompt performance of all obligations under the franchise agreement and any associated Food Service Agreements. This includes guaranteeing the punctual payment of all sums owed by the Franchisee under the agreement or due to any breach of the agreement's provisions.
Furthermore, the Individual commits to performing or ensuring the performance of all the Franchisee's obligations immediately upon demand. The Individual is also responsible for covering any losses, damages, costs, and expenses that arise from the Franchisee's failure to meet its obligations or pay sums when due. This responsibility extends to the Individual's own failure to comply with their obligations as outlined in the agreement. The franchisor does not have to demand payment from or take action against the franchisee before seeking fulfillment from the individual.
The Individual's liability is joint and several, meaning they can be held fully liable regardless of the Franchisee's situation. This liability is not reduced or affected by any unenforceability, invalidity, or other issues related to the Franchisee's obligations. The guarantee is a continuing one, remaining in effect until all of the Franchisee's obligations are fully performed and paid. The Individual must also ensure the Franchisee performs all obligations, devote full-time attention to the Franchisee's business, be a director, officer, or managing member of the Franchisee, and hold more than 50% of the issued voting capital of the Franchisee during the term of the agreement. The Individual cannot assign or transfer any of their rights or obligations under the agreement.
In practical terms, this means that the Individual is personally and heavily invested in the success and compliance of the Bevaris Alliance franchise. They cannot simply be a passive investor but must actively manage and oversee the business to ensure all obligations are met. This arrangement is designed to protect Bevaris Alliance by ensuring a responsible and committed party is accountable for the franchise's operations and financial obligations. Prospective franchisees should carefully consider the implications of this individual guarantee and ensure they are prepared to meet these stringent requirements.