Can Clean Your Dirty Face proceed against the guarantor and franchisee jointly?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Franchisor may proceed against Guarantor and Franchisee jointly and severally, or Franchisor may, at its option, proceed against Guarantor, without having commenced any action, or having obtained any judgment against Franchisee. Guarantor hereby waives the defense of the statute of limitations in any action hereunder or for the collection of any indebtedness or the performance of any obligation hereby guaranteed; and
- (e) Guarantor agrees to pay all reasonable attorneys 'fees and all costs and other expenses incurred in any collection or attempt to collect amounts due pursuant to this undertaking or any negotiations relative to the obligations hereby guaranteed or in enforcing this undertaking against Guarantor.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, the franchisor has the option to proceed against the guarantor and franchisee jointly. The guarantor's liability is direct, immediate, and independent of the franchisee's liability, and it is joint and several with the franchisee and other owners. This means Clean Your Dirty Face can pursue both the franchisee and the guarantor simultaneously for any breaches or defaults under the franchise agreement.
This clause protects Clean Your Dirty Face by providing multiple avenues for recourse in case of franchisee default. It ensures that the franchisor isn't limited to pursuing only the franchisee, who may have limited assets or be facing bankruptcy. The guarantor's assets are also at stake, providing an additional layer of security for Clean Your Dirty Face. The guarantor also waives the defense of the statute of limitations, which means they cannot claim that the time limit for bringing a legal action has expired.
For a prospective Clean Your Dirty Face franchisee, this means that anyone acting as a guarantor (often required if the franchisee is a business entity or has limited personal assets) needs to be fully aware of the extent of their financial exposure. The guarantor's obligations are not contingent on Clean Your Dirty Face first pursuing the franchisee. The guarantor may be targeted directly, even without prior action against the franchisee. This is a standard practice in franchising, as it provides the franchisor with added financial security and recourse.
Furthermore, the guarantor agrees to cover all reasonable attorney's fees and costs associated with collecting amounts due or enforcing the guarantee. This can significantly increase the financial burden on the guarantor in the event of a dispute or default. The guarantor is also bound by the arbitration obligations outlined in the franchise agreement, meaning any disputes will be resolved through binding arbitration rather than court litigation. This can be a faster and more cost-effective method of dispute resolution, but it also means the guarantor waives the right to a jury trial.