What waivers are included in the Guaranty for City Wide franchisees?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
SECTION 3. Waiver. Guarantors hereby waive promptness, diligence, notice of acceptance and any other notice with respect to any of the Obligations and this Guaranty and any requirement that CITY WIDE
protect, secure, perfect or insure any security interest or lien or any property subject thereto or exhaust any right or take any action against Franchisee or any other person or entity or any collateral.
SECTION 4. Waiver of Subrogation. Notwithstanding anything to the contrary in this Guaranty, Guarantors hereby irrevocably waive all rights they may have at law or in equity, to the extent that such rights may interfere with any claim or demand by CITY WIDE under the Franchise Agreement or this Guaranty (including, without limitation, any law subrogating the Guarantors to the rights of CITY WIDE), to seek contribution, indemnification, or any other form of reimbursement from Franchisee, any other Guarantor, or any other person now or hereafter primarily or secondarily liable for any obligations of Franchisee to CITY WIDE, for any disbursement made by the Guarantors under or in connection with this Guaranty or otherwise. If (i) Guarantors will make payment to CITY WIDE of all or any part of the Obligations and (ii) all the Obligations will be paid in full, CITY WIDE will, at Guarantors' request, execute and deliver to Guarantors appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to Guarantors of an interest in the Obligations resulting from such payment by Guarantors.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, the Guaranty includes several waivers that affect the rights of the guarantors. These waivers are designed to protect City Wide's interests and ensure the obligations of the franchisee are met. The guarantors, which may include partners, shareholders, officers, directors, and potentially spouses or domestic partners, agree to these waivers as part of the franchise agreement.
Specifically, guarantors waive promptness, diligence, notice of acceptance, and any other notice related to the obligations and the Guaranty. They also waive any requirement that City Wide protect, secure, perfect, or insure any security interest or lien on property, or exhaust any right or take action against the franchisee or any collateral. Furthermore, guarantors waive rights to seek contribution, indemnification, or any form of reimbursement from the franchisee or any other person liable for the franchisee's obligations to City Wide. This includes waiving rights that might interfere with any claim or demand by City Wide under the Franchise Agreement or the Guaranty, such as rights of subrogation.
These waivers mean that guarantors have limited recourse against the franchisee or other liable parties if they make payments to City Wide under the Guaranty. The liability of the guarantors is absolute and unconditional, irrespective of the validity or enforceability of the Franchise Agreement, changes to payment terms, or the release or non-perfection of any collateral. However, if the obligations are paid in full, City Wide will provide documents to evidence the transfer by subrogation to the guarantors of an interest in the obligations resulting from their payment.
These provisions are typical in franchise agreements to ensure the franchisor has strong protection against potential defaults by the franchisee. Prospective City Wide franchisees should carefully review these waivers with their legal counsel to fully understand their implications and potential liabilities as guarantors.