Regarding the guarantee and indemnity for a Chatime franchise, is it discharged or prejudicially affected by any settlement of accounts?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
y Guarantor to Franchisor under the guarantee in clause 18.3 had Franchisee been bound.
- (2) Guarantor indemnifies Franchisor and agrees to hold it harmless in respect of any failure by Franchisee to perform any of its obligations under this Agreement including any obligation to pay money to Franchisor.
18.5 Continuing Security
This guarantee and indemnity is a continuing security, and is not discharged or prejudicially affected by any settlement of accounts, but remains in full force until a final release is given by Franchisor.
18.6 Matters Not Affecting Guarantor's Liability
Guarantor's liability under clauses 18.3 and 18.4 is not affected by:
(1) The granting of time, forbearance, or other concession by Franchisor to Franchisee or any Guarantor;
(2) An absolute or partial release of Franchisee or any Guarantor or a compromise with Franchisee or any Guarantor;
(3) A variation of this Agreement;
(4) A transfer of this Agreement by Franchisee;
(5) The termination of this Agreement;
(6) Any disputes or differences between Franchisee and Franchisor;
(7) The fact that this Agreement is wholly or partially void, voidable, or unenforceable;
(8) The non-execution of this Agreement by one or more of the persons named as Guarantor or the unenforceability of the guarantee or indemnity against one or more of Guarantors;
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the guarantee and indemnity provided by the guarantor is a continuing security and is not discharged or negatively affected by any settlement of accounts. This means the guarantor's obligations remain in full force until Chatime provides a final release.
Several factors do not affect the guarantor's liability, including granting time or concessions to the franchisee, releasing the franchisee, varying the agreement, transferring the agreement, terminating the agreement, or any disputes between the franchisee and Chatime. Even if the agreement is void, voidable, or unenforceable, or if some guarantors don't execute the agreement, the guarantor's liability remains.
Furthermore, if a payment made to Chatime is later avoided by law, the guarantor's liability is not discharged. In such cases, both parties are restored to their original rights and obligations as if the payment had never occurred. This ensures that Chatime's financial security is maintained regardless of settlements, legal issues, or changes in the franchisee's circumstances.