Under what circumstances is the Guaranty of Performance required 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, a Guaranty of Performance is required when the franchisee/debtor is a corporation, professional corporation, partnership, limited liability partnership, or limited liability company. In these cases, principal stockholders who own 5% or more of the debtor's stock must execute the Guaranty of Performance.
The Guaranty of Performance ensures that these principal stockholders unconditionally guarantee the full performance of all covenants, conditions, and agreements outlined in the Schedule B or C of the Coffee News Franchise Agreement and the associated Promissory Note. This guarantee extends to the debtor's successors and assigns.
The guaranty remains valid regardless of any leniency granted by Coffee News USA, Inc. to the debtor, any actions taken by Coffee News USA, Inc. against the debtor under the Schedule B or C, or any relief the debtor receives from obligations under the Schedule B or C due to legal proceedings, including bankruptcy. The guarantor waives any notice, protest, demand for acceptance of the Guaranty, suretyship defenses, and similar defenses.