What is the implication of the term 'jointly and severally' in the Cinnaholic Development Agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
| ("Franchisor") of that certain Cinnaholic | Franchise Agreement, | dated , 20 (as the same |
|---|---|---|
| from time to time may be amended, | modified, extended or renewed, | the "Franchise Agreement"), by and |
| between | ("Franchisee") | the |
| and | undersigned, for the | |
| Franchisor, | term of the | |
| Franchise Agreement and any | extension or renewal thereof, and | thereafter until all obligations of Franchisee to Franchisor have been satisfied, jointly and severally, do hereby personally, absolutely, and unconditionally guarantee that Franchisee shall punctually pay and perform each and every undertaking, |
| condition, and covenant set forth in the Franchise Agreement. |
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the term 'jointly and severally' in the context of the Development Agreement means that each individual or entity signing the guarantee is fully responsible for all the obligations of the Developer (the franchisee). This applies until all obligations of the Developer to Cinnaholic have been completely fulfilled.
In practical terms, if there are multiple guarantors, Cinnaholic can pursue any one or all of them for the full amount of the debt or obligation. Cinnaholic is not required to seek only a portion of the debt from each guarantor based on the number of guarantors. This provides Cinnaholic with a stronger position, as they can target the guarantor with the most accessible assets to recover any losses quickly and efficiently.
For a prospective Cinnaholic franchisee, this means that if they are asked to have multiple individuals (e.g., business partners, spouses) guarantee the Development Agreement, each guarantor should understand that they are taking on full responsibility for the franchisee's obligations. It is crucial for each guarantor to be fully aware of the financial risks involved and to have confidence in the franchisee's ability to meet their obligations under the Development Agreement. This clause is a standard practice in franchising to protect the franchisor's interests.