What is the significance of the phrase 'jointly and severally' in the Cinnaholic Guaranty Agreement regarding the obligations of the guarantor?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of, and as an inducement to, CINNAHOLIC FRANCHISING, LLC ("Franchisor") of that certain CINNAHOLIC FRANCHISING, LLC Market Development Agreement, dated , 20 (as the same from time to time may be amended or modified, the "Development Agreement"), by and between ("Developer") and Franchisor, the undersigned, for the term of the Development Agreement, and thereafter until all obligations of Developer to Franchisor have been satisfied, jointly and severally, do hereby personally, absolutely, and unconditionally guarantee that Developer shall punctually pay and perform each and every undertaking, condition, and covenant set forth in the Development Agreement.
Each of the undersigned further waives acceptance and notice of acceptance of the foregoing obligations of Developer, notice of demand for payment of any indebtedness or for performance of any obligations hereby guaranteed, and any right the undersigned may have to require that an action be brought against Developer or any other person as a condition to the liability of the undersigned.
This Guaranty is a guarantee of payment and performance not merely one of collection. Each of the undersigned further consents and agrees that its liability under this Guaranty shall be direct and immediate and joint and several; that the undersigned shall render any payment or performance required under the Development Agreement upon demand if Developer fails or refuses punctually to do so; that such liability shall not be contingent or conditioned upon the pursuit of any remedies against Developer or any other person; and that such liability shall not be diminished, relieved or otherwise affected by the extension of time, credit or any other indulgence which Franchisor, its affiliates, successors or assigns may, from time to time, grant to Developer or to any other person, including, without limitation, the acceptance of any partial payment or performance, or the compromise or release of any claims, or the release of any one or more of the undersigned hereunder, or the consent to assignment of the Development Agreement or any interest in Developer, none of which shall in any way modify or amend this Guaranty, which shall be continuing and irrevocable throughout the term of the Development Agreement and any extension or renewal thereof and thereafter until all obligations of Developer to Franchisor have been satisfied.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the phrase 'jointly and severally' within the Guaranty Agreement has significant implications for anyone acting as a guarantor for a Cinnaholic franchisee or developer. This clause means that each guarantor is individually and collectively responsible for the full obligations of the franchisee or developer. Cinnaholic can pursue any one guarantor for the entire debt or obligation, regardless of whether other guarantors exist or what their respective financial situations may be. This provides Cinnaholic with a direct and immediate recourse to secure their interests.
For a prospective guarantor, this means accepting a high level of personal risk. If the franchisee or developer fails to meet their financial or performance obligations under the Franchise Agreement or Development Agreement, Cinnaholic can seek full compensation from any single guarantor. That guarantor would then be responsible for recovering contributions from any other co-guarantors. This is a critical point to consider, especially if there are multiple guarantors with differing levels of assets or involvement in the Cinnaholic franchise.
The Guaranty Agreement also stipulates that the guarantor's liability is direct and immediate, and is not contingent on Cinnaholic first pursuing remedies against the franchisee or any other party. The guarantor also waives any right to require Cinnaholic to take action against the franchisee before pursuing the guarantor. Furthermore, the guarantor's obligations remain in effect even if Cinnaholic grants extensions of time, credit, or other indulgences to the franchisee. This includes accepting partial payments or performance, compromising claims, or releasing other guarantors, none of which will modify or amend the Guaranty. The guaranty remains continuing and irrevocable until all obligations of the franchisee to Cinnaholic have been satisfied.