Under the Carbones Pizzeria Guaranty, what is the effect of any other forbearance on the part of Franchisor?
Carbones_Pizzeria Franchise · 2025 FDDAnswer from 2025 FDD Document
The undersigned understand and agree that any modification of the Franchise Agreement or any other agreement, including any addendum or addenda thereto, or waiver by Franchisor of the performance by Franchisee of its obligations thereunder, or the giving by Franchisor of any extension of time for the performance of any of the obligations of Franchisee thereunder, or any other forbearance on the part of Franchisor or any failure by Franchisor to enforce any of its rights under the Franchise Agreement or any other agreement, including any addendum or addenda thereto, shall not in any way release the undersigned from liability hereunder or terminate, affect, or diminish the validity of this Guaranty, except to the same extent, but only to such extent, that the liability or obligation of Franchisee is so released, terminated, affected, or diminished. Notice to the undersigned of any such modification, waiver, extension, or forbearance under the terms thereof being hereby waived.
Source: Item 22 — CONTRACTS (FDD page 30)
What This Means (2025 FDD)
According to the 2025 Carbones Pizzeria Franchise Disclosure Document, the Guaranty signed by the franchisee is not affected by any leniency or failure to enforce rights on the part of Carbones Pizzeria. Specifically, any forbearance on the part of Carbones Pizzeria, or any failure by Carbones Pizzeria to enforce its rights under the Franchise Agreement or any other agreement, does not release the guarantor from liability. The only exception is if the franchisee's liability or obligation is released, terminated, affected, or diminished, then the guarantor's obligation is similarly affected, but only to the same extent.
This means that even if Carbones Pizzeria allows the franchisee some leeway in meeting their obligations, such as extending deadlines or waiving certain requirements temporarily, the guarantor remains fully responsible for the franchisee's debts and performance. The guarantor's obligations remain in place unless Carbones Pizzeria explicitly releases or reduces the franchisee's obligations.
Furthermore, the guarantor waives the right to be notified of any modifications, waivers, extensions, or forbearance granted to the franchisee. This waiver reinforces that the guarantor's responsibility is independent of any specific actions Carbones Pizzeria might take with the franchisee. The guarantor is essentially agreeing to be bound by the terms of the guaranty regardless of any changes or concessions made between Carbones Pizzeria and the franchisee.
This clause protects Carbones Pizzeria by ensuring that the guaranty remains valid and enforceable even if they choose to work with a struggling franchisee. However, it places a significant responsibility on the guarantor, who must be aware that their obligations are unlikely to be reduced or eliminated unless the franchisee's underlying obligations are also reduced or eliminated.