What is the document referred to as 'Guaranty' for City Wide franchisees?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
agreements heretofore or hereafter granted to other CITY WIDE System franchise owners in a non-uniform manner, unless otherwise required by this Agreement or by law.
24.6 No amendment, change or variance from this Agreement shall be binding upon either CITY WIDE or Franchisee except by mutual written agreement. If an amendment of this Agreement is executed at Franchise Owner's request, any legal fees or costs of preparation in connection therewith shall, at the option of CITY WIDE, be paid by Franchisee.
SECTION 25. Franchisee Defined and Guaranty
As used in this Agreement, the terms "Franchisee" and "Franchisee's" will include all persons who succeed to the interest of the original Franchisee by transfer or operation of law. If Franchisee is a legal entity, then at least one natural person will have at least a majority ownership interest in Franchisee. By their signatures to this Agreement, all partners, shareholders, officers, and directors of the entity that sign this Agreement as Franchisee acknowledge and accept the duties and obligations imposed upon each of them, individually, by the terms of this Agreement. The singular usage includes the plural, and the masculine usage includes the feminine. All partners, shareholders, officers, and directors of the entity executing the Franchise Agreement are required to execute the Guaranty and Assumption of Obligations which is attached to this Franchise Agreement as Attachment A-1. Additionally, spouses or domestic partners of principals, owners or stockholders will be required to provide a conditional guaranty of payment in the form attached to this Agreement as Attachment A-2.
SECTION 26. Caveat.
THE SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED TO BE UNDERTAKEN BY FRANCHISEE BY VIRTUE OF THIS AGREEMENT IS SPECULATIVE AND DEPENDS, TO A LARGE EXTENT, UPON THE ABILITY OF FRANCHISEE AS AN INDEPENDENT BUSINESSMAN, AND FRANCHISEE'S ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE FRANCHISED BUSINESS, AS WELL AS OTHER FACTORS. CITY WIDE DOES NOT MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE POTENTIAL SUCCESS OF THE FRANCHISED BUSINESS.
SECTION 27. Arbitration and Dispute Resolution
- 27.1 All controversies, disputes or claims arising between Franchisee and CITY WIDE in connection with, arising from, or with respect to: (1) any provision of this Agreement or in any other agreement related to this Agreement between the parties; (2) the relationship of the parties; (3) the validity of this Agreement or any other agreement related to this Agreement between the parties, or any provisions of those agreements; or (4) any specification, standard or operating procedure relating to the establishment or operation of the Franchised Business (except controversies, disputes or claims relating to the Marks or any lease or sublease or real estate) which is not resolved within fifteen (15) calendar days after either party notifies the other in writing of such controversy, dispute or claim, will be submitted for binding arbitration in accordance with the Commercial Rules ("Rules") of the American Arbitration Association or its successor. Arbitration will take place at an appointed time and place in Lenexa, Kansas, or such other location designated by CITY WIDE in the Kansas City, Missouri Metropolitan area.
- 27.2 The parties shall select an arbitrator pursuant to the Rules, or its successors, within the time required by such Rules, following the initial arbitration request or application, and such arbitration shall be governed by such Rules.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if the franchisee is a legal entity, all partners, shareholders, officers, and directors must execute a Guaranty and Assumption of Obligations, which is attached to the Franchise Agreement as Attachment A-1. This means that these individuals personally guarantee the franchisee's obligations under the Franchise Agreement. Additionally, spouses or domestic partners of principals, owners, or stockholders are required to provide a conditional guaranty of payment, which is attached to the Agreement as Attachment A-2.
The Guaranty ensures that City Wide has recourse to the personal assets of the franchisee's principals and their spouses/domestic partners if the franchise fails to meet its financial obligations. This is a common practice in franchising, as it provides the franchisor with an additional layer of security. The spousal guaranty is conditional, meaning its terms and enforcement may be subject to specific conditions outlined in Attachment A-2.
The Spousal Guarantor unconditionally guarantees the punctual payment of all obligations of the Franchisee, including fees, expenses, and interest. The Spousal Guarantor also agrees to pay any expenses, including attorney fees, incurred by City Wide in enforcing its rights under the Guaranty. The liability of the Spousal Guarantor is absolute and unconditional, irrespective of the validity or enforceability of the Franchise Agreement, changes to payment terms, or other circumstances that might constitute a defense for the Franchisee or Spousal Guarantor.
This requirement ensures that City Wide has multiple avenues for recovering any losses incurred due to a franchisee's default. Prospective franchisees should carefully review Attachments A-1 and A-2 to fully understand the scope of the personal guarantees they and their spouses/domestic partners are required to provide. Franchisees should seek legal counsel to fully understand the implications of signing a personal guarantee, as it can have significant financial consequences.