What is the stated purpose of the Spousal Guaranty and Assumption of Obligations agreement for a City Wide franchise?
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.
SECTION 2. Guaranty Absolute. Spousal Guarantor guarantees that the Obligations will be paid strictly in accordance with the terms of the Franchise Agreement, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of CITY WIDE with respect thereto. The liability of Spousal Guarantor under this Guaranty is absolute and unconditional irrespective of:
- (i) Any lack of validity or enforceability of the Franchise Agreement or any other agreement or instrument relating thereto;
- (ii) Any change in the time, manner, or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of, or any consent to departure from, the Franchise Agreement;
- (iii) Any exchange, release, or non-perfection of any collateral, or any release or amendment or waiver of, or consent to departure from, any other guaranty for all or any of the Obligations; or
- (iv) Any other circumstance which might otherwise constitute a defense available to, or a discharge of, Franchisee or Spousal Guarantor.
This Guaranty will continue to be effective, or be reinstated, if at any time any payment of the Obligations is rescinded or must otherwise be returned by CITY WIDE upon the insolvency, bankruptcy, or reorganization of Franchisee or otherwise, all as though such payment had not been made.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the purpose of the Spousal Guaranty and Assumption of Obligations is to secure the franchisee's obligations under the Franchise Agreement. The Spousal Guarantor agrees to unconditionally guarantee the punctual payment of all obligations, including fees, expenses, and interest, ensuring City Wide receives all payments due. This guarantee is designed to induce City Wide to enter into the Franchise Agreement with the franchisee.
The Spousal Guarantor's liability is absolute and unconditional, irrespective of the validity or enforceability of the Franchise Agreement, changes to payment terms, or any other circumstances that might constitute a defense for the franchisee. This means the Spousal Guarantor remains liable even if the Franchise Agreement is altered or if the franchisee faces bankruptcy or reorganization. The guaranty remains effective even if payments are rescinded and must be returned to City Wide.
The Spousal Guaranty also includes waivers of certain rights, such as the right to receive notices or to require City Wide to protect any security interests. The Spousal Guarantor also waives rights to seek reimbursement from the franchisee for any payments made under the Guaranty. This ensures City Wide's claims under the Franchise Agreement and Guaranty are not interfered with. The Guaranty remains in effect until all obligations are paid in full and is governed by the laws of Kansas.