Are the Casiola Franchisee's Owners jointly and severally liable for all payments due to the Franchisor?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
any and all other rights and remedies available to Franchisor as set forth in this Agreement, and, at law and in equity, shall possess the following rights and remedies, each of which are not exclusive of the other and may be/are in conjunction with one another:
- (1) To void and terminate this Agreement, and thereafter to market, sell, transfer, convey and assign the rights granted to Franchisee under this Agreement to any other person or entity in Franchisor's sole discretion and without compensation to Franchisee.
- (2) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, all payments, fees, monetary obligations, financial obligations, interest, and charges due and owing to Franchisor from Franchisee pursuant to this Agreement, the Ancillary Agreements, and/or any other agreements between Franchisee and Franchisor, including, without limitation, Royalty Fees and Advertising Contributions with each and every payment and obligation to be accelerated and due immediately.
- (3) To hold Franchisee and Franchisee's Owners liable for, and recover from each of them, jointly and severally, lost revenues, profits, and fees including, but not limited to Royalty Fees, Brand Development Fund Fee, Advertising Contributions, and all other fees, revenues and/or expenses that would have been paid to Franchisor, under the terms of this Agreement and throughout the Term of this Agreement, had a breach not occurred and had Franchisor not terminated this Agreement. In calculating and determining the foregoing, Franchisee agrees that in calculating and in determining such damages that it is fair and reasonable to use Franchisee's most recent calendar year Gross Sales in calculating and determining Franchisor lost revenues and fees and by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. If, however, the Franchised Business has been open and in operation for less than one calendar year, Franchisee agrees that it is fair and reasonable to use an average of Casiola Business Gross Sales across the System during the year in which this Agreement was terminated and to use such average Gross Sales for the purpose of calculating and determining Franchisor lost revenues and fees and, in doing so, by assuming that such Gross Sales would have been earned in each and every year throughout the remainder of the Term had this Agreement not been terminated. Franchisee agrees that the foregoing is a form of liquidated damages, and that it is fair and reasonable.
- (4) To hold Franchisee and Franchisee's Owners liable for all costs, fees, expenses, and/or damages incurred by Franchisor and/or suffered by Franchisor as a result of a breach or termination including, but not limited to, the recovery of reasonable attorney fees and expenses including court costs, arbitration fees, mediation fees, arbitrator fees, mediator fees, depositions and other related expenses.
- (5) To enjoin, restrain, and otherwise prohibit Franchisee from operating the Franchised Business or exercising any rights granted to Franchisee under this Agreement pursuant to a court order restraining order, injunction or other means.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, the Franchisee and each Owner are jointly and severally liable for all payments due to Casiola. This means that Casiola can pursue any one or all of the owners for the full amount of the debt, regardless of their individual ownership stake or involvement in the business.
Specifically, upon termination of the Franchise Agreement, Casiola can hold the Franchisee and the Franchisee's Owners liable, jointly and severally, for all payments, fees, monetary obligations, financial obligations, interest, and charges due. This includes Royalty Fees and Advertising Contributions, as well as lost revenues, profits, and fees that Casiola would have received throughout the term of the agreement had the breach not occurred.
Casiola also requires Franchisee's Owners to sign a Franchise Owner Agreement and Guaranty. This agreement personally obligates the owners to guarantee the Franchisee's obligations to Casiola and to comply with brand protection, confidentiality, and noncompetition restrictions. This further reinforces the joint and several liability of the owners.
This is a significant consideration for prospective Casiola franchisees, especially those considering a multi-owner business structure. Each owner should be fully aware that they are personally guaranteeing the financial obligations of the franchise and could be held responsible for the entire debt, even if other owners are better positioned to pay. Franchisees should seek legal counsel to fully understand the implications of joint and several liability before signing the Franchise Agreement.