Under the Carvel Guaranty, what is the definition of 'Obligations'?

According to Carvel's 2025 Franchise Disclosure Document, the Guaranty outlines the obligations of the Guarantor to Carvel. The term 'Obligations' encompasses two key aspects. First, it includes the full and prompt payment and performance of all the franchisee's obligations, as well as the obligations of its owners, officers, directors, agents, and employees, to Carvel under the Franchise Agreement. This extends to any amendments to the Franchise Agreement or any other agreements between the franchisee and Carvel. Second, 'Obligations' also covers the full and prompt payment or reimbursement of all amounts, costs, expenses, claims, liabilities, or obligations that Carvel incurs under the Franchise Agreement.

In practical terms, this means that the Guarantor is on the hook for ensuring that the franchisee meets all financial and operational requirements outlined in the Franchise Agreement. This includes not only making timely payments for fees, royalties, and other charges, but also adhering to all performance standards and other contractual obligations. Furthermore, the Guarantor is responsible for covering any costs or liabilities that Carvel incurs as a result of the franchisee's actions or failure to act in accordance with the Franchise Agreement.

For a prospective Carvel franchisee, this Guaranty has significant implications. Before signing the Guaranty, potential guarantors should carefully review the Franchise Agreement and understand the full scope of the franchisee's obligations to Carvel. They should also assess the franchisee's financial stability and operational capabilities to determine the likelihood of the franchisee meeting its obligations. The Guarantor should also be aware that this obligation survives the termination of the Franchise Agreement.