Under the Carvel Guaranty, does Carvel have to notify the Franchisee before proceeding against the Guarantor?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
igations (collectively, the "Obligations"): (i) the full and prompt payment and performance of all Franchisee's and its owners', officers', directors', agents' and employees' obligations to Franchisor under the Franchise Agreement, any amendment to the Franchise Agreement or any other agreement between Franchisee and Franchisor; and (ii) the full and prompt payment or reimbursement of all amounts, costs, expenses, claims, liabilities, or obligations Franchisor incurs under the Franchise Agreement. Guarantor agrees that if Franchisee does not make payments under the Franchise Agreement when due or perform any obligations required of it in accordance with the Franchise Agreement or satisfy any Obligations Franchisor incurs related to any of them, Guarantor will make the payments and reimbursements and cause the obligations to be performed within 5 days of Franchisor's notice to Guarantor. If there is more than one Guarantor, all the terms in this Guaranty are joint and several.
-
- Payment. If Franchisee defaults under the Franchise Agreement, Franchisor may proceed directly against any or each Guarantor without first proceeding against or notifying Franchisee and without proceeding against any other Guarantor.
-
- Waivers by Guarantor. Guarantor waives (i) all rights to payments and claims for reimbursement or subrogation that each Guarantor may have against Franchisee arising as a result of the Guarantor's execution of and performance under this Guaranty, for the express purpose that no Guarantor shall be deemed a "creditor" of Franchisee under any applicable bankruptcy law with respect to Franchisee's obligations to Franchisor; (ii) all rights to require Franchisor to proceed against Franchisee for any Obligation, proceed against or exhaust any security from Franchisee, take any action to assist any Guarantor in seeking reimbursement or subrogation in connection with this Guaranty or pursue, enforce or exhaust any remedy, including any legal or equitable relief, against Franchisee; (iii) any benefit of, any right to participate in, any security now or hereafter held by Franchisor;
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel does not have to notify the franchisee before proceeding against the guarantor. The Guaranty of Payment and Performance outlines the obligations of the guarantor, who is typically an owner of the franchisee. Carvel requires this guaranty to enter into the Franchise Agreement.
Specifically, if the franchisee defaults on payments or obligations under the Franchise Agreement, Carvel can proceed directly against the guarantor without first notifying or taking action against the franchisee. The guarantor is responsible for making payments and ensuring obligations are met within 5 days of receiving notice from Carvel.
Additionally, the guarantor waives certain rights, including the right to require Carvel to proceed against the franchisee first. This means Carvel has the flexibility to seek payment or performance directly from the guarantor without exhausting other remedies. The guarantor also waives rights to notices of demand for payment. This clause is designed to protect Carvel's interests by allowing them to pursue the guarantor swiftly in case of a default by the franchisee.