Does the cessation of liability of one Carvel Guarantor relieve other Guarantors from liability?

According to Carvel's 2025 Franchise Disclosure Document, the cessation of liability for one guarantor does not automatically relieve other guarantors. The guaranty agreement ensures that if one guarantor is released from their obligations, the remaining guarantors are still responsible for fulfilling the terms of the franchise agreement. However, this is conditional, as the remaining guarantors would be relieved of their obligations if the default has been remedied or the monies owed have been paid.

This provision protects Carvel by ensuring that the obligations under the franchise agreement are met even if one guarantor is no longer liable. For a prospective franchisee, especially those involving multiple owners or investors acting as guarantors, this means that each guarantor remains responsible for the franchise's financial and operational obligations unless the specific default is resolved or the debt is settled.

This clause is standard in franchise agreements to provide financial security to the franchisor. Franchisees should carefully consider the implications of this clause, especially when multiple parties are acting as guarantors, to understand the extent of their individual and collective responsibilities. Franchisees should seek legal counsel to fully understand the terms and potential liabilities associated with the guaranty agreement.