Under the Cream franchise agreement, is a Guarantor's liability joint or individual?
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 Franchise Owner and among other guarantors; (2) Guarantor will render any payment or performance required under the Agreement upon demand if Franchise Owner fails or refuses punctually to do so; (3) this liability will not be contingent or conditioned upon our pursuit of any remedies against Franchise Owner 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 Franchise Owner 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 Franchise Owner under the Agreement.
Each Guarantor waives: (i) all rights to payments and claims for reimbursement or subrogation which any Guarantor may have against Franchise Owner arising as a result of the Guarantor's execution of and performance under this Guaranty; and (ii) acceptance and notice of acceptance by us of Guarantor's undertakings under this Guaranty, notice of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed, protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed, and any other notices to which he or she may be entitled.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee is an entity such as a corporation, LLC, or partnership, any owner with a 10% or greater ownership interest must execute a guarantee. This guarantee means that the owner is personally bound, jointly and severally, by all provisions of the Franchise Agreement and any related ancillary agreements between the franchisee and Cream. This requirement ensures that individuals with significant stakes in the franchise entity are personally liable for the franchise's obligations.
The Guarantor's liability is not contingent upon Cream first pursuing remedies against the Franchise Owner or any other person. Cream can seek payment or performance directly from the Guarantor if the Franchise Owner fails to fulfill their obligations. The Guarantor's obligations will not be affected by any extensions of time, credit, or other allowances that Cream may grant to the Franchise Owner. This includes accepting partial payments, compromising claims, or amending the terms of the Franchise Agreement.
In practical terms, this means that if the franchise defaults on its financial or operational obligations, Cream can pursue any or all of the guarantors for the full amount owed, regardless of whether Cream has first attempted to recover from the franchise itself. This is a significant risk for the guarantor, as they are essentially co-signing the franchise's obligations and could be held responsible for the entire debt or liability. The guarantor also waives certain rights, such as the right to be notified of any defaults or non-performance by the franchisee. Prospective franchisees should carefully consider the implications of this guarantee and seek legal advice before signing the Franchise Agreement.