Under the City Wide Guaranty, is the Guarantor's liability absolute and unconditional?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
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This Guaranty will continue to be effective, or be reinstated, if at any time any payment of the Obligations is rescinded or must otherwise be returned by CITY WIDE upon the insolvency, bankruptcy, or reorganization of Franchisee or otherwise, all as though such payment had not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 liability of the guarantor under the Guaranty is indeed absolute and unconditional. This means the guarantor is fully responsible for the franchisee's obligations under the Franchise Agreement, regardless of various circumstances that might otherwise provide a defense.
Specifically, the guarantor's liability remains in effect irrespective of the validity or enforceability of the Franchise Agreement, changes to payment terms, release of collateral, or any other circumstance that could discharge the franchisee or guarantor. This underscores the comprehensive nature of the guarantee, placing a significant responsibility on the guarantor.
This absolute and unconditional guarantee continues to be effective even if payments are rescinded or returned due to the franchisee's insolvency, bankruptcy, or reorganization. The guarantor also waives certain rights, such as requiring City Wide to take action against the franchisee or protect any security interests. Prospective City Wide franchisees should carefully consider the implications of this absolute guarantee and ensure that any individual acting as a guarantor fully understands the extent of their obligations and potential liabilities.