Under the Bevaris Alliance agreement, what is the Individual's responsibility regarding the Franchisee's obligations if the Franchisor refuses to perfect any security against the Franchisee?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
s 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.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to Bevaris Alliance's 2024 Franchise Disclosure Document, the Individual's guarantee of the Franchisee's obligations remains in effect even if Bevaris Alliance chooses not to pursue or perfect any security against the Franchisee. Specifically, the Individual's liability is not reduced or affected if Bevaris Alliance refuses or neglects to perfect or enforce any right, remedy, or security against the Franchisee. This means the Individual's obligations as a guarantor are independent of Bevaris Alliance's actions regarding securing the Franchisee's debt.
The Individual's guarantee is a continuing one, remaining in effect until the Franchisee has fully paid and performed all obligations under the franchise agreement. The Individual cannot exercise rights of subrogation and indemnity, take benefit from any security, or prove in the Franchisee's liquidation until all obligations are met, unless instructed otherwise by Bevaris Alliance. If the Individual does exercise any of these rights, they must hold any recovered amounts in trust for Bevaris Alliance and pay them on demand.
During the term of the agreement, the Individual has ongoing responsibilities to ensure the Franchisee performs all obligations, devote full-time attention to the Franchisee's business, be a director/officer/managing member of the Franchisee, and hold more than 50% of the Franchisee's voting capital. The Individual cannot assign or transfer their rights or obligations under the agreement. This comprehensive guarantee underscores the importance of the Individual's role in ensuring the Franchisee's compliance with the franchise agreement, regardless of Bevaris Alliance's enforcement actions against the Franchisee.