Under the C12 Group Owner's Guaranty, what is the effect of the undersigned individuals guaranteeing the prompt and complete performance of each and every obligation of the Franchisee?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the undersigned individuals represents and warrants that he/she owns at least five percent (5%) of the equity interests of the above-referenced entity.
Accordingly, to induce Franchisor to enter into this Agreement, each of the undersigned individuals, jointly and severally, hereby guarantees the prompt and complete performance of each and every obligation of the Franchisee with respect to the foregoing Agreement and the prompt and complete payment of each and every financial obligation of the Franchisee with respect to the foregoing Agreement.
The undersigned individuals agree that Franchisor does not have to pursue any remedies Franchisor may have against the Franchisee, but rather, Franchisor may, in its sole discretion, proceed directly and primarily against any one or more of the undersigned individuals with or without joining the above-named Franchisee as principal or as a named party in any proceeding.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 C12 Group Franchise Disclosure Document, the Owner's Guaranty stipulates that individuals owning at least 5% of the equity interests of the franchisee entity guarantee the franchisee's obligations to C12 Group. This guarantee ensures the prompt and complete performance of all obligations and financial responsibilities outlined in the Franchise Agreement. Practically, this means that if the franchisee entity fails to meet its obligations, C12 Group can pursue the individual guarantors directly for fulfillment of those obligations.
The Owner's Guaranty allows C12 Group to seek remedies directly from the guarantors without first pursuing action against the franchisee. This provides C12 Group with a more direct and potentially faster route to resolving any breaches of the Franchise Agreement. The individuals signing the guaranty are jointly and severally liable, meaning C12 Group can pursue any one or all of them for the full amount of the obligation.
For a prospective C12 Group franchisee, this means that if the franchise is owned by a corporate entity, any individual with at least 5% ownership will be personally responsible for the franchise's performance and financial obligations. This is a significant commitment and should be carefully considered, as it puts personal assets at risk if the franchise fails to meet its obligations to C12 Group. This type of guarantee is common in franchising, as it provides the franchisor with added security and recourse in case of franchisee default.