Can the Company determine what may be done with reference to any security or collateral related to Browns Chicken obligations without affecting the liability of any of the guarantors?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
poses.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the date first above written.
| Secured Party: | Debtor: |
|---|---|
| Brown's Chicken, LLC | |
| an Illinois limited liability company | |
| By: | By: |
| Title: | Title: |
Add UCC Financing Form here
Rider E to Franchise Agreement
GUARANTY AND ASSUMPTION OF OBLIGATIONS DESIGNATION OF AUTHORIZED REPRESENTATIVE
| THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this day of , 20, by |
|---|
| of |
| 1. |
| In consideration of, and to induce BROWN'S CHICKEN, LLC (the "Company") to enter |
| into a franchise agreement dated, 20 (the "Franchise Agreement"), with |
| ("Franchisee"), each of the undersigned hereby |
| personally and unconditionally (a) guarantees to the Company, and its successors and assigns, |
| for the term of the Agreement and thereafter as provided in the Agreement, that the Franchisee |
| shall punctually pay and perform each and every undertaking, agreement and covenant set forth |
| in the Agreement; and (b) agrees to be personally bound by, and personally liable for the breach |
| of, each and every provision in the Agreement, both monetary obligations and obligations to take |
| or refrain from taking specific actions or to engage or refrain from engaging in specific activities, |
| including without limitation the provisions of Sections 15, 17, and 21 (all of which shall be |
| referred to as the "Obligations"). |
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- Each of the undersigned waives: (1) acceptance and notice of acceptance by the Company of the foregoing undertakings; (2) notice of demand for payment of any indebtedness or nonperformance of any Obligations hereby guaranteed; (3) protest and notice of default to any party with respect to the indebtedness or nonperformance of Obligations hereby guaranteed; (4) any right he may have to require that an action be brought against Franchisee or any other person as a condition of liability; (5) any and all other notices and legal or equitable defenses to which he may be entitled; and (6) any right to disclosures from the Company regarding the financial condition of Franchisee or any guarantor of Franchisee.
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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;
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
Based on the 2025 Browns Chicken Franchise Disclosure Document, the document does not explicitly state whether Browns Chicken can make determinations about security or collateral related to franchisee obligations without affecting the liability of guarantors. However, the FDD does discuss the obligations of guarantors and the security interests Browns Chicken takes in franchisee assets. Browns Chicken requires a personal and unconditional guarantee from the franchisee to ensure the franchisee performs all obligations under the franchise agreement. This guarantee extends for the term of the agreement.
Browns Chicken also takes a security interest in certain franchisee property as collateral for the franchisee's obligations. This collateral is described in Rider D to the Franchise Agreement, and the franchisee must execute a Security Agreement and Financing Statement. Browns Chicken can file a Uniform Commercial Code Financing Statement against this collateral. The franchisee cannot allow any other liens against this property without Browns Chicken's consent, although Browns Chicken will not unreasonably withhold consent for financing related to establishing the franchise and may subordinate its lien to the lender.
In the event of a franchisee's failure to perform or pay, Browns Chicken has the right to take immediate possession of the property identified in Rider D without notice. Because the FDD does not specify whether Browns Chicken can alter the security or collateral without affecting the guarantor's liability, it is important for a prospective franchisee to seek clarification from Browns Chicken regarding the extent to which the company can act on the collateral without impacting the obligations of the guarantors. This is a critical point to understand, as it directly affects the risk assumed by anyone acting as a guarantor for the franchise agreement.