Under the Guaranty, what must a Guarantor do upon demand from Chocolate Bash Franchising, LLC?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantor agrees as follows:
- **1.
Guaranty.** Guarantor hereby unconditionally guarantees to CB Franchising and its successors and assigns that Franchisee shall pay and perform every undertaking, agreement and covenant set forth in the Franchise Agreement and further guarantees every other liability and obligation of Franchisee to CB Franchising, whether or not contained in the Franchise Agreement.
Guarantor shall render any payment or performance required under the Franchise Agreement or any other agreement between Franchisee and CB Franchising upon demand from CB Franchising.
Guarantor waives (a) acceptance and notice of acceptance by CB Franchising of this Guaranty; (b) notice of demand for payment of any indebtedness or nonperformance of any obligations of Franchisee; (c) protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed; (d) any right Guarantor may have to require that an action be brought against Franchisee or any other person or entity as a condition of liability hereunder; (e) all rights to payments and claims for reimbursement or subrogation which any of the undersigned may have against Franchisee arising as a result of the execution of and performance under this Guaranty by the undersigned; (f) any law which requires that CB Franchising make demand upon, assert claims against or collect from Franchisee or any other person or entity (including any other guarantor), foreclose any security interest, sell collateral, exhaust any remedies or take any other action against Franchisee or any other person or entity (including any other guarantor) prior to making any demand upon, collecting from or taking any action against the undersigned with respect to this Guaranty; and (g) any and all other notices and legal or equitable defenses to which Guarantor may be entitled.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, if a franchisee is an entity, each owner must sign a personal guaranty, ensuring they will fulfill the franchisee's obligations to Chocolate Bash Franchising, LLC. This guaranty is detailed in Attachment 3 of the franchise agreement.
Specifically, the guarantor unconditionally guarantees that the franchisee will pay and perform every undertaking, agreement, and covenant outlined in the Franchise Agreement. This also extends to any other liability or obligation the franchisee has to Chocolate Bash, whether or not it's explicitly in the Franchise Agreement. Upon demand from Chocolate Bash Franchising, LLC, the guarantor must render any payment or performance required under the Franchise Agreement or any other agreement between the franchisee and Chocolate Bash Franchising, LLC.
The guarantor also waives several rights, including the right to require Chocolate Bash to first take action against the franchisee before demanding payment or performance from the guarantor. This means Chocolate Bash can seek payment directly from the guarantor without initially pursuing the franchisee. The guarantor also forgoes rights to reimbursement or subrogation against the franchisee resulting from their performance under the guaranty.
This arrangement protects Chocolate Bash by providing an additional layer of security, ensuring that the financial and contractual obligations of the franchisee are met. However, it places significant personal financial risk on the guarantor, who is essentially vouching for the franchisee's performance and financial solvency. Prospective franchisees should carefully consider the implications of this personal guaranty and seek legal counsel to fully understand their obligations and potential liabilities.