Under the Carls Jr. guarantee, is the liability of each guarantor joint and several?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 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 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, the liability of each guarantor is joint and several. This means that each guarantor is individually liable for the full amount of the developer's obligations under the agreement. Carls Jr. can pursue any one guarantor for the entire debt, regardless of whether other guarantors exist or their ability to pay. This provides Carls Jr. with a stronger position, as they are not required to pursue all guarantors simultaneously or proportionally.
This aspect of the guarantee has significant implications for potential Carls Jr. franchisees and their guarantors. Individuals considering acting as guarantors should understand that they are taking on substantial personal financial risk. Even if the developer is a corporation or LLC, the personal guarantors are fully exposed. The guarantee remains in effect during the term of the agreement and afterwards, as long as monies or obligations are owed to CJR or its affiliates.
Furthermore, the guarantee is not diminished or affected by any amendments to the agreement, extensions of time, or other indulgences granted to the developer. Even 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, the obligations under the Guarantee shall continue to remain in force and effect unless CJR in its sole discretion, in writing, releases those person(s) from this Guarantee. A release of one guarantor does not affect the obligations of any other guarantor. This underscores the comprehensive and enduring nature of the guarantee, requiring careful consideration by all parties involved.