Does an amendment to the Area Development Agreement modify the Cream Guaranty?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Each Guarantor consents and agrees that: (1) Guarantor's direct and immediate liability under this Guaranty will be joint and several, both with Area Developer and among other guarantors; (2) Guarantor will render any payment or performance required under the Agreement upon demand if Area Developer fails or refuses punctually to do so; (3) this liability will not be contingent or conditioned upon our pursuit of any remedies against Area Developer or any other person; (4) this liability will not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence which we may from time to time grant to Area Developer or to any other person, including the acceptance of any partial payment or performance or the compromise or release of any claims, or any amendment, waiver or restatement to any terms of the Agreement, none of which will in any way modify or amend this Guaranty, which will be continuing and irrevocable during the term of the Agreement; and (5) at our request, each Guarantor shall present updated financial information to us as reasonably necessary to demonstrate such Guarantor's ability to satisfy the financial obligations of Area Developer under the Agreement.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, the Guaranty provided by the guarantor to Cream will not be affected or diminished by any amendments to the Area Development Agreement. The guarantor's liability remains intact even if Cream grants extensions of time, credit, or other indulgences to the Area Developer, accepts partial payments, compromises claims, or makes any changes or restatements to the Area Development Agreement's terms. The Guaranty remains continuous and irrevocable throughout the Area Development Agreement's term, regardless of any such modifications.
This means that as a prospective Cream franchisee, if you are required to have a guarantor for your Area Development Agreement, that guarantor's obligations are not lessened by any changes Cream makes to the agreement with you. The guarantor remains fully liable for your performance under the original agreement's terms, as well as any subsequent amendments. This provides Cream with continuous security, ensuring that the guarantor cannot claim release from their obligations due to alterations in the agreement.
This clause protects Cream by ensuring the Guaranty remains effective regardless of changes to the Area Development Agreement. For a guarantor, this signifies a substantial commitment, as their liability persists even if the agreement's terms evolve. Prospective franchisees should ensure that any potential guarantors fully understand this aspect of the Guaranty, as it has long-term implications for their financial responsibilities.