Under the Bevaris Alliance agreement, what is the effect of the Individual's guarantee being a 'continuing guarantee'?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
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, the Individual's guarantee is a continuing guarantee, meaning it remains in effect until the franchisee has fully paid all sums and fulfilled all obligations under the franchise agreement. This implies that the guarantor's obligations are not limited to a specific time or amount but extend throughout the entire duration of the agreement and until all financial and performance obligations are completely satisfied. This ensures that Bevaris Alliance has ongoing recourse to the guarantor for the franchisee's liabilities.
Furthermore, the Individual is restricted from exercising certain rights until all of the franchisee's obligations are met. These rights include subrogation and indemnity, taking benefit from any security or guarantee for the franchisee's obligations, and proving in the liquidation of the franchisee, unless instructed by Bevaris Alliance. If the Individual exercises any of these rights, they must hold any recovered amounts in trust for Bevaris Alliance and pay them upon demand. This provision protects Bevaris Alliance's financial interests by preventing the guarantor from competing with them for the franchisee's assets in case of default or liquidation.
During the term of the agreement, the Individual has several obligations. They must 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. Additionally, the Individual cannot assign or transfer any rights or obligations under the agreement. These requirements ensure the Individual's active involvement and commitment to the success of the Bevaris Alliance franchise, aligning their interests with those of the franchisor and maintaining control over the franchisee's operations.