What does the Guaranty of Performance ensure regarding the Schedule B/C for a Coffee News franchise?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR VALUE RECEIVED, and in consideration for, and as in inducement to Coffee News USA, Inc. as the Holder to make the foregoing Schedule B / C to Coffee News Franchise [name of the Franchisee/Debtor], as the Debtor Agreement with (the "Schedule B"), the undersigned, who each own 5% or more of the Debtor, unconditionally guarantee the full performance of all the covenants, conditions and agreements therein provided to be performed and observed by the Debtor and the Debtor's successors and assigns pursuant to the Schedule B / C and the Promissory Note contained therein, and expressly agrees that the validity of this Guaranty of Performance and the obligations of the guarantor(s) hereunder shall not be terminated, affected or impaired by reason of the granting by Holder of any indulgences to Debtor or by reason of the assertion by Holder against Debtor of any of the rights or remedies reserved to Holder pursuant to the provisions of the Schedule B / C or by the relief of Debtor from any of Debtor's obligations under said Schedule B / C by operation of law or otherwise (including without implied limitation, the rejection or assignment of the Schedule B / C and/or the Promissory Note) in connection with proceedings under bankruptcy laws now or hereafter enacted), irrespective of Holder's consent or other action or inaction with respect to such relief, the undersigned hereby waiving notice, protest, demand of the acceptance of this Guaranty all suretyship defenses and all defenses in the nature thereof.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News Franchise Disclosure Document, the Guaranty of Performance ensures the fulfillment of obligations under Schedule B/C. Specifically, if the franchisee is a corporation, professional corporation, partnership, limited liability partnership, or limited liability company, principal stockholders owning 5% or more of the debtor (franchisee) must unconditionally guarantee the full performance of all covenants, conditions, and agreements outlined in Schedule B/C and the associated Promissory Note. This guarantee extends to the debtor's successors and assigns.
This means that these principal stockholders are personally liable for the Coffee News franchisee's adherence to the terms of Schedule B/C and the Promissory Note. The guarantor's obligations remain valid regardless of any leniency granted to the debtor by Coffee News USA, Inc., or any legal proceedings, including bankruptcy. The guarantor waives any rights to notice, protest, or defenses related to suretyship.
For a prospective Coffee News franchisee, this implies that if the business is not a sole proprietorship, individuals with significant ownership (5% or more) must be willing to personally guarantee the franchise's financial and operational commitments. This is a common practice in franchising, as it provides the franchisor with additional security and recourse in case of default or non-compliance by the franchisee. It is crucial for potential franchisees and their principal stockholders to fully understand the implications of this Guaranty of Performance before signing the franchise agreement.