Is the Cd One Price Cleaners Guaranty considered a guaranty of payment or collection?
Cd_One_Price_Cleaners Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor further agrees as follows:
- This Guaranty is an absolute, unconditional and irrevocable guaranty of payment and of performance, and not of collection. It shall be enforceable against Guarantor without the necessity of any suit or proceedings on Sublandlord's part of any kind or nature whatsoever against Subtenant and without the necessity of any notice of nonpayment, nonperformance or nonobservance or of any notice of acceptance of this Guaranty or of any other notice or demand to which Guarantor might otherwise be entitled, all of which Guarantor hereby expressly waives; and Guarantor hereby expressly agrees that the validity of this Guaranty and the obligations of Guarantor hereunder shall in no way be terminated, affected, diminished, or impaired by reason of the assertion or the failure to assert by Sublandlord against Subtenant, or against Subtenant's successors and assigns, any of the rights or remedies reserved to Sublandlord pursuant to the provisions of the Sublease or by relief of Subtenant from any of Subtenant's obligations under the Sublease or otherwise, including, without limitation, the rejection of the Sublease in connection with proceedings under the bankruptcy laws now or hereafter in effect.
Source: Item 22 — Contracts (FDD page 72)
What This Means (2025 FDD)
According to the 2025 FDD, the Guaranty associated with the sublease agreement for Cd One Price Cleaners is an absolute, unconditional, and irrevocable guaranty of payment and performance, not of collection. This means the guarantor is immediately responsible for the obligations, without the sublandlord needing to first pursue the subtenant.
This distinction is significant for anyone acting as a guarantor. A guaranty of payment obligates the guarantor to fulfill the debt or obligation immediately if the subtenant defaults. The sublandlord does not have to attempt to recover from the subtenant first. In contrast, a guaranty of collection would require the sublandlord to first try to collect from the subtenant before seeking recourse from the guarantor.
The guarantor also waives several rights, including the right to receive notices of nonpayment or nonperformance, and any defenses they might otherwise have. This waiver strengthens the sublandlord's position, making it easier to enforce the guaranty should the subtenant fail to meet their obligations under the sublease. The guarantor also relinquishes rights to claims for reimbursement or subrogation against the subtenant, ensuring they cannot be considered a creditor of the subtenant in bankruptcy proceedings.