For what term does the guarantor's guarantee to Carls Jr. extend?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- **1.
Guarantee To Be Bound By Certain Obligations.** Guarantors hereby personally and unconditionally 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 each will be personally bound by the restrictions contained in Section 12 of the Agreement.
- **2.
Guarantee and Assumption of Developer's Obligations.** 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 Developer and any assignee of Developer'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 12 and 16; and (C) agree to be personally liable for the breach of each and every provision in the Agreement.
3.
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.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the guarantors personally and unconditionally guarantee to CJR and its successors and assigns that they will be bound by the restrictions contained in Section 12 of the Agreement for the term of the Agreement and thereafter as provided in the Agreement or at law or in equity. The guarantors also guarantee that the Developer and any assignee of the Developer's interest under the Agreement shall punctually pay and perform each undertaking, agreement, and covenant set forth in the Agreement and punctually pay all other monies owed to CJR and/or its affiliates for the term of the Agreement and thereafter as provided in the Agreement or at law or in equity.
This means that the guarantor's obligations extend not only for the initial term of the franchise agreement but also beyond that period, as specified within the agreement itself, by law, or through equitable principles. This extended liability could encompass scenarios where the franchisee has ongoing financial obligations to Carls Jr. even after the franchise term concludes, or if legal or equitable reasons necessitate the continuation of the guarantee.
Furthermore, the guarantee remains in effect even if there are changes to the agreement, extensions of time, or other allowances granted to the developer. The guarantee is 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. This ensures that Carls Jr. is protected against potential losses due to non-payment or non-performance by the franchisee, even if the original terms of the agreement are modified.
If a guarantor 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. However, 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.