What sections of the Carls franchise agreement are the Guarantors agreeing to be personally bound by, besides Section 12?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- B. Each of the undersigned consents and agrees that: (1) his direct and immediate liability under this Guarantee shall be joint and several; (2) he shall render any payment or performance required under the Agreement if Developer fails or refuses punctually to do so; (3) such liability shall not be contingent or conditioned upon pursuit by CJR of any remedies against Developer or any other person; (4) such liability shall not be diminished, relieved or otherwise affected by any amendment of the Agreement, any extension of time, credit or other indulgence which CJR may from time to time grant to Developer 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 this Guarantee, which shall be continuing and irrevocable during the term of the Agreement and for so long thereafter as there are monies or obligations owing from Developer to CJR or its affiliates under the Agreement; and (5) monies received from any source by CJR for application toward payment of the obligations under the Agreement and under this Guarantee may be applied in any manner or order deemed appropriate by CJR.
In addition, if any of the undersigned ceases to be a member of the Continuity Group, a 10% Owner, or own any direct or indirect interest in Developer or any of the Franchised Restaurants, that person (and his spouse, if the spouse is also a guarantor) agrees that the obligations under this Guarantee shall continue to remain in force and effect unless CJR in its sole discretion, in writing, releases those person(s) from this Guarantee.
Notwithstanding the provisions of the previous sentence, unless prohibited by applicable law, the obligations contained in Section 12.C. of the Agreement shall remain in force and effect for a period of 2 years after any such release by CJR.
A release by CJR of any of the undersigned shall not affect the obligations of any other Guarantor.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the guarantors to the franchise agreement are agreeing to be directly and immediately liable under the guarantee, with such liability being joint and several. This means that each guarantor can be held responsible for the full amount of the debt or obligation. The guarantors are responsible for rendering any payment or performance required under the agreement if the developer fails or refuses to do so punctually. This obligation is not contingent upon Carls pursuing remedies against the developer or any other person.
The liability of the guarantors will not be diminished, relieved, or otherwise affected by any amendment of the agreement, any extension of time, credit, or other indulgence granted by Carls to the developer or any other person. This includes the acceptance of any partial payment or performance, or the compromise or release of any claims. The guarantee remains continuing and irrevocable during the term of the agreement and as long as there are monies or obligations owing from the developer to Carls or its affiliates under the agreement.
Monies received by Carls from any source for application toward payment of the obligations under the agreement and under the guarantee may be applied in any manner or order deemed appropriate by Carls. Even if a guarantor ceases to be a member of the Continuity Group, a 10% Owner, or own any direct or indirect interest in the developer or any of the franchised restaurants, their obligations under the guarantee will continue unless Carls, in its sole discretion, releases them in writing. However, even with such a release, the obligations contained in Section 12.C. of the agreement remain in effect for two years after the release.