What is the condition that induces the Guarantors to guarantee the obligations of the Franchisee to City Wide?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, CITY WIDE desires to accept such guarantee.
NOW, THEREFORE, in consideration of the covenants and conditions herein set forth, and in order to induce CITY WIDE to enter into the Franchise Agreement, the Spousal Guarantor hereby agrees as follows:
SECTION 1. Guaranty. Spousal Guarantor hereby unconditionally guarantees the punctual payment when due, whether at stated maturity, by acceleration, or otherwise, of all obligations of Franchisee now or hereafter existing under the Franchise Agreement, whether for fees, expenses, interest, or otherwise (collectively, "Obligations"), and agrees to pay any and all expenses (including attorney fees and expenses) incurred by CITY WIDE in enforcing any rights under this Guaranty, except to the extent limited by Section 5 below.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the inducement for the Guarantors to guarantee the obligations of the Franchisee is City Wide's agreement to enter into the Franchise Agreement. The document states that the guarantee is made "in order to induce CITY WIDE to enter into the Franchise Agreement". This means that City Wide requires a guarantee from the Guarantors as a condition before they will grant the franchise to the Franchisee.
The Guaranty ensures the punctual payment of all obligations of the Franchisee under the Franchise Agreement, including fees, expenses, and interest. The Guarantors also agree to cover any expenses City Wide incurs while enforcing its rights under the Guaranty. This guarantee is absolute and unconditional, meaning the Guarantors' obligations remain in effect regardless of any changes or issues related to the Franchise Agreement's validity or enforceability.
This requirement protects City Wide by providing an additional layer of financial security. If the Franchisee fails to meet their financial obligations, City Wide can seek recourse from the Guarantors. For a prospective franchisee, this means that they will likely need to find someone willing to act as a guarantor, which could be a spouse or other close individual, who is willing to take on the financial risk associated with the franchise.