Under the Cinnabon Guaranty, what specific obligations are guaranteed by the Guarantor to the Franchisor?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor guarantees to Franchisor and its successors and assigns the following obligations (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.
Source: Item 23 — Receipts (FDD pages 114–399)
What This Means (2025 FDD)
According to the 2025 Cinnabon Franchise Disclosure Document, the Guarantor ensures specific obligations to Cinnabon Franchisor SPV LLC. The Guarantor guarantees the full and prompt payment and performance of all the franchisee's obligations, including those of its owners, officers, directors, agents, and employees, to Cinnabon under the Franchise Agreement. This extends to any amendments to the Franchise Agreement or any other agreement between the franchisee and Cinnabon.
Furthermore, the Guarantor guarantees the full and prompt payment or reimbursement of all amounts, costs, expenses, claims, liabilities, or obligations that Cinnabon incurs under the Franchise Agreement. This means that if the franchisee fails to meet their financial or performance obligations, the Guarantor is responsible for covering these liabilities.
In essence, the Guarantor acts as a financial safety net for Cinnabon, ensuring that the franchisor does not suffer losses due to the franchisee's failure to uphold their contractual duties. This arrangement mitigates Cinnabon's risk in entering into a franchise agreement, as there is an additional party responsible for the franchisee's obligations. The guarantor has 5 days of Franchisor's notice to make the payments and reimbursements and cause the obligations to be performed.