Under what conditions can the Holder proceed against the guarantor of 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 guarantor of a Coffee News franchise can be held liable under specific circumstances detailed in the Guaranty of Performance agreement. This agreement, typically executed by principal stockholders owning 5% or more of the Debtor (the franchisee), ensures the full performance of all obligations by the franchisee as outlined in Schedule B/C and the Promissory Note.
The guarantor's obligations are triggered by the franchisee's failure to meet the terms of the Schedule B/C or the Promissory Note. Specifically, the guarantor's obligations remain even if Coffee News USA, Inc., as the Holder, grants indulgences to the franchisee, asserts its rights against the franchisee, or if the franchisee is relieved of their obligations due to legal reasons, including bankruptcy proceedings. The guarantor waives any notice, protest, or demand related to the acceptance of the Guaranty, as well as any suretyship defenses.
This means that if a Coffee News franchisee defaults on their financial or contractual obligations, Coffee News can pursue the guarantor for the full performance of those obligations without needing to provide prior notice or consider defenses typically available to sureties. This arrangement provides Coffee News with a significant level of financial security, as it ensures that there is a responsible party who can be held accountable for the franchisee's performance. Prospective franchisees should carefully review the Guaranty of Performance agreement and understand the full extent of their obligations before signing.