What is the effect of the guarantee on the Developer's obligations to Cinnaholic Franchising, LLC?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Until all obligations of Developer to Franchisor have been satisfied, the obligations of the undersigned under this Guaranty shall remain in full force and effect without regard to, and shall not be released, discharged or in any way modified or affected by, any circumstance or condition (whether or not the undersigned shall have any knowledge or notice thereof), including, without limitation, any bankruptcy, insolvency, reorganization, composition, liquidation or similar proceeding, with respect to Developer or its properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding. Each of the undersigned specifically waives any rights that may be conferred upon the undersigned as a guarantor or surety under the applicable law of any state. The remedies provided herein shall be nonexclusive and cumulative of all other rights, powers and remedies provided under the Development Agreement or by law or in equity.
The undersigned hereby agree that without the consent of or notice to any of the undersigned and without affecting any of the obligations of the undersigned hereunder, any term, covenant or condition of the Development Agreement may be amended, compromised, released or otherwise altered by Franchisor and the Developer and the undersigned do guarantee and promise to perform all of the obligations of the Developer under the Development Agreement as so amended, compromised, released or altered.
Upon notice from Franchisor that Developer has failed to pay monies due and owing to Franchisor under the Development Agreement, any and each of the undersigned agree to cure the monetary default within five business days from such notice. Upon the death of an undersigned, the estate of such undersigned shall be bound by this Guaranty but only for defaults and obligations hereunder existing at the time of death. The obligations of the surviving undersigned shall continue in full force and effect.
The undersigned expressly acknowledge that the obligations hereunder survive the termination of the Development Agreement.
Franchisor's failure to enforce all or any portion of its rights under this Guaranty shall not constitute a waiver of its ability to do so at any point in the future.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the guarantee ensures that the obligations of the guarantor to Cinnaholic remain fully effective until the developer fulfills all their obligations to Cinnaholic. This remains true regardless of any circumstances or conditions, including bankruptcy or similar proceedings involving the developer. The guarantor also waives any rights they might have as a guarantor or surety under state law. This means that the guarantor's responsibility to Cinnaholic is comprehensive and not easily discharged.
Furthermore, Cinnaholic can amend, compromise, release, or alter any term of the Development Agreement without affecting the guarantor's obligations, and without needing to notify or obtain consent from the guarantor. The guarantor continues to guarantee the developer's obligations under the altered agreement. This provision gives Cinnaholic significant flexibility in managing the Development Agreement without risking the guarantee.
If Cinnaholic notifies the guarantor that the developer has failed to pay monies due, the guarantor must cure the monetary default within five business days. Even the death of a guarantor does not release their estate from obligations existing at the time of death, and the obligations of any surviving guarantors remain in effect. The guarantee survives the termination of the Development Agreement, meaning the guarantor's obligations continue even after the agreement ends. Cinnaholic's failure to enforce its rights under the guarantee at any time does not waive its ability to do so in the future. This comprehensive guarantee provides Cinnaholic with strong protection regarding the developer's obligations.