In the Creative Colors Guaranty, what is the 'Agreement' referring to?
Creative_Colors Franchise · 2025 FDDAnswer from 2025 FDD Document
| THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this day of , |
|---|
| 20 |
| , by |
| ("Guarantor"). Guarantor is an owner of Franchisee. |
| In consideration |
| of, |
| and |
| as |
| an inducement to, the execution of that |
| certain |
| Franchise |
| Agreement of |
| even date herewith (the "Agreement") by Creative Colors International, Inc. ("Franchisor"), each of the |
| undersigned hereby personally and unconditionally (1) guarantees to Franchisor, and its successors and |
| assigns, for the term of the Agreement and thereafter as provided in the Agreement, that |
| ("Guarantor") shall punctually pay and perform each |
| and every undertaking, agreement and covenant set forth in the Agreement; and (2) shall be personally |
| bound by, and personally liable for the breach of each and every provision in the Agreement, both |
| monetary obligations and obligations to take or refrain from taking specific actions or to engage or |
| refrain from engaging in specific activities, including without limitation the provisions of Section |
| XVI of |
| the Franchise |
| Agreement. |
| Each of the undersigned waives: |
| (1) acceptance |
| and notice of acceptance by |
| Franchisor of the foregoing undertakings; (2) notice of demand for payment of any indebtedness or non |
| performance of any obligations hereby guaranteed; |
| (3) protest and notice of default to any party with respect to the indebtedness or non-performance of |
| any obligations hereby guaranteed; (4) any right it may have to require that an action be brought |
| against Franchisee or |
| any other person as a condition of liability; |
| and |
| (5) |
| any |
| and all other notices |
| and |
| legal or equitable defenses to which Franchisee, he or she, may be entitled. |
Source: Item 23 — RECEIPT (FDD pages 69–217)
What This Means (2025 FDD)
According to the 2025 Creative Colors Franchise Disclosure Document, the 'Agreement' referenced in the Guaranty and Assumption of Obligations is the Franchise Agreement itself. The guarantor, who is an owner of the franchisee, provides a personal and unconditional guarantee to Creative Colors International, Inc. (the Franchisor) for the term of the Franchise Agreement. This guarantee ensures that the franchisee will punctually pay and perform every undertaking, agreement, and covenant outlined in the Franchise Agreement.
This means that the guarantor is personally bound by all provisions in the Franchise Agreement, including monetary obligations and obligations to take or refrain from specific actions. The guarantor also waives certain rights, such as requiring the franchisor to bring an action against the franchisee first, and any legal or equitable defenses the franchisee may be entitled to.
For a prospective Creative Colors franchisee, this implies that if they are obtaining a franchise through a legal entity, they as owners will have to personally guarantee the obligations of the franchise. This is a common practice in franchising, as it provides the franchisor with additional security and recourse in case of default or breach of contract by the franchisee. The spouse of the owner may also have to sign a spousal guarantee.