Can the Company determine the allocation and application of payments and credits and accept partial payments for Browns Chicken obligations without affecting the liability of any of the guarantors?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Each of the undersigned consents and agrees that: (1) his direct and immediate liability under this guaranty shall be joint and several; (2) he shall render any payment or performance required under the Agreement upon demand if Franchisee fails or refuses punctually to do so; (3) such liability shall not be contingent or conditioned upon pursuit by the Company of any remedies against Franchisee or any other person; (4) such liability shall not be diminished, relieved or otherwise affected by any extension of time, credit or other indulgence which the Company may from time to time grant to Franchisee or to any other person, including without limitation 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 his guaranty, which shall be continuing and irrevocable during the term of the Agreement; and (5) no claim, including a claim for contribution or subrogation, which any of the undersigned may have against a co-guarantor of any of the Obligations or Franchisee shall be enforced nor any payment accepted until the Obligations are paid in full and the payments are not subject to any right of recovery.
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Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the guarantors' obligations remain intact even if Browns Chicken accepts partial payments or modifies the agreement with the franchisee. Specifically, the guaranty agreement states that the liability of the guarantors is not affected by the acceptance of partial payments or performance. This means that if the franchisee fails to meet their financial or performance obligations, the guarantor is still responsible for fulfilling those obligations, regardless of any partial payments or compromises Browns Chicken might accept.
The guarantor consents and agrees that their liability is joint and several, meaning each guarantor is individually liable for the full amount of the debt. The guarantor's obligation to make payments or fulfill performance requirements arises immediately upon demand if the franchisee fails to do so. This obligation is not contingent upon Browns Chicken pursuing remedies against the franchisee or any other person first.
Furthermore, the guarantor's liability is not diminished or affected by any extensions of time, credit, or other allowances Browns Chicken may grant to the franchisee. The acceptance of partial payments, compromises, or releases of claims does not modify the guaranty, which remains continuing and irrevocable during the term of the agreement. The guarantor also waives certain rights, including the right to require Browns Chicken to take action against the franchisee before pursuing the guarantor and any right to disclosures regarding the franchisee's financial condition.