According to the Carls Jr. Guarantee, what events constitute a 'Default'?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 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 pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, a 'Default' under the Guarantee occurs under specific circumstances. These include failure to make timely payments or fulfill obligations as outlined in the Guarantee. A default also occurs if there is a breach of any agreement or representation within the Guarantee.
Additionally, a 'Default' is triggered by the dissolution, termination of existence, or loss of good standing status of the guarantor. The appointment of a receiver for the guarantor, an assignment for the benefit of creditors, or the commencement of any insolvency or bankruptcy proceeding by or against the guarantor also constitutes a default.
Finally, the entry of any monetary judgment or the assessment of any tax lien against the guarantor, or the issuance of any writ of garnishment or attachment against any property or debts due to the guarantor, will result in a 'Default' under the Guarantee. If any of these default events occur, the obligations of the guarantor become immediately due and payable without notice. Upon the death of a guarantor, their estate remains bound by the Guarantee for all existing obligations at the time of death, and the obligations of any surviving guarantors continue in full force.