Under the Carls Guarantee, what events constitute a 'Default'?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- E. If any of the following events occur, a default ("Default") under this Guarantee shall exist: (1) failure of timely payment or performance of the obligations under this Guarantee; (2) breach of any agreement or representation contained or referred to in this Guarantee; (3) the dissolution of, termination of existence of, loss of good standing status by, appointment of a receiver for, assignment for the benefit of creditors of, or the commencement of any insolvency or bankruptcy proceeding by or against,
any of the undersigned; and/or (4) the entry of any monetary judgment or the assessment against, the filing of any tax lien against, or the issuance of any writ of garnishment or attachment against any property of or debts due any of the undersigned. If a Default occurs, the obligations of the undersigned shall be due immediately and payable without notice. Upon the death of one of the undersigned, the estate shall be bound by this Guarantee for all obligations existing at the time of death. The obligations of the surviving Guarantors shall continue in full force and effect.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a 'Default' under the Guarantee occurs under the following circumstances: failure to make timely payments or fulfill obligations as required by the Guarantee; breaching any agreement or representation mentioned in the Guarantee; experiencing dissolution, termination of existence, loss of good standing, appointment of a receiver, assignment for the benefit of creditors, or commencement of insolvency or bankruptcy proceedings by or against any of the undersigned guarantors.
Additionally, a default occurs if there is the entry of any monetary judgment or the assessment against, the filing of any tax lien against, or the issuance of any writ of garnishment or attachment against any property of or debts due any of the undersigned guarantors. If any of these events occur, all obligations of the guarantors become immediately due and payable without notice.
In the event of the death of one of the guarantors, the estate becomes bound by the Guarantee for all obligations existing at the time of death, while the obligations of the surviving guarantors remain in full force and effect. This clause ensures that Carls maintains financial security through the guarantee, and any failure to uphold the guarantee's terms can result in immediate and serious financial repercussions for the franchisee and their guarantors.