Under the Carvel Guaranty, what duty or obligation does Carvel have to the Guarantors?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor shall have no present or future duty or obligation to the Guarantors under this Guaranty, and each Guarantor waives any right to claim or assert any such duty or obligation, to discover or disclose to any Guarantor any information, financial or otherwise, concerning Franchisee, any Guarantor, or any collateral securing any Obligations of Franchisee to Franchisor. Without affecting the Obligations of Guarantor under this Guaranty, Franchisor may, without notice to any Guarantor, (a) extend, modify, supplement, waive strict compliance with, or release all or any provisions of the Franchise Agreement or any indebtedness or Obligation, (b) settle, adjust, release, or compromise (including if made in or out of court on receivership, liquidation, bankruptcy, reorganization, arrangement, or assignment for the benefit of creditors) any claims against Franchisee or any Guarantor, (c) make advances for the purpose of performing any Obligations, or (d) assign the Franchise Agreement or the right to receive any sum payable under the Franchise Agreement, and the Guarantors each hereby jointly and severally waive notice of same.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel has no present or future duty or obligation to the Guarantors under the Guaranty. Each Guarantor waives any right to claim or assert any such duty or obligation. This includes any duty to discover or disclose any information, financial or otherwise, concerning the Franchisee, any Guarantor, or any collateral securing any obligations of Franchisee to Carvel.
Even without notifying any Guarantor, Carvel can extend, modify, supplement, waive strict compliance with, or release all or any provisions of the Franchise Agreement or any indebtedness or obligation. Carvel can also settle, adjust, release, or compromise any claims against Franchisee or any Guarantor, make advances for the purpose of performing any obligations, or assign the Franchise Agreement or the right to receive any sum payable under the Franchise Agreement. The Guarantors waive notice of these actions.
In essence, the Guarantor's obligations are designed to be as comprehensive as possible, while Carvel retains maximum flexibility in dealing with the Franchisee's obligations without needing to inform or seek consent from the Guarantor. This arrangement places a significant responsibility on the Guarantor to understand the Franchisee's business and financial situation, as they are guaranteeing the Franchisee's performance without recourse to claim any specific duty or obligation from Carvel.