What obligations of the Franchisee does the Guarantor guarantee to Carls will be punctually paid and performed?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantors hereby: (A) guarantee to CJR and its successors and assigns, for the term of the Agreement and thereafter as provided in the Agreement or at law or in equity, that Franchisee and any assignee of Franchisee's interest under the Agreement shall: (1) punctually pay and perform each and every undertaking, agreement and covenant set forth in the Agreement and (2) punctually pay all other monies owed to CJR and/or its affiliates; (B) agree to be personally bound by each and every provision in the Agreement, including, without limitation, the provisions of Sections 20 and 25; and (C) agree to be personally liable for the breach of each and every provision in the Agreement.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the Guarantors guarantee that the Franchisee will punctually pay and perform every undertaking, agreement, and covenant outlined in the Franchise Agreement. Additionally, the Guarantors ensure the Franchisee will punctually pay all other monies owed to CJR (Carls Jr. Restaurants) and/or its affiliates.
This guarantee extends for the entire term of the Franchise Agreement and continues thereafter as provided in the agreement or by law. The Guarantors also agree to be personally bound by every provision in the Agreement, including Sections 20 and 25, and to be personally liable for any breaches of these provisions. This means that if the franchisee fails to meet their financial or operational obligations, Carls can seek recourse directly from the Guarantors.
The Guarantors' obligations are joint and several, meaning each guarantor is individually liable for the full amount of the franchisee's obligations. Carls is not obligated to pursue remedies against the franchisee or any other person before seeking payment or performance from the Guarantors. The liability of the Guarantors remains unaffected by any amendments to the Franchise Agreement or any extensions of time or credit granted to the franchisee. This ensures that Carls maintains a consistent level of security regardless of changes in the franchisee's circumstances.
Furthermore, Carls has the discretion to apply monies received from any source towards the franchisee's obligations in any manner it deems appropriate. Even if a guarantor ceases to be a member of the Continuity Group, a 10% Owner, an officer or director of Franchisee or own any direct or indirect interest in Franchisee or the Franchised Restaurant, their obligations under the Guarantee remain in effect unless Carls provides a written release. This comprehensive guarantee underscores the importance Carls places on securing the franchisee's commitments and minimizing its financial risk.