How does a bankruptcy filing affect the personal guaranty for a Deer Solution franchise?
Deer_Solution Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that: (a) your direct and immediate liability under this guaranty shall be joint and several with Franchisee and all other signatories to this Agreement; (b) you will render any payment required under the Franchise Agreement and the Ancillary Agreements upon demand if Franchisee fails or refuses punctually to do so; (c) your liability shall not be contingent or conditioned upon pursuit by us of any remedies against Franchisee or any other person; and (d) liability shall not be diminished, relieved or otherwise affected by any extension of time, credit or other indulgence that we may grant to Franchisee or to any other person, including the acceptance of any partial payment or performance, or the compromise or release of any claims, none of which shall in any way modify or amend this guarantee, which shall be continuing and irrevocable during the term of each of the Franchise Agreement and the Ancillary Agreements and following the termination, expiration or Transfer of each of the Franchise Agreement and the Ancillary Agreements to the extent any financial obligations under any such Franchise Agreement and Ancillary Agreements survive such termination, expiration or Transfer. This guaranty will continue unchanged by the occurrence of any bankruptcy with respect to Franchisee or any assignee or successor of Franchisee or by any abandonment of one or more of the Franchise Agreement and/or and Ancillary Agreements by a trustee of Franchisee. Neither your obligation to make payment in accordance with the terms of this undertaking nor any remedy for enforcement shall be impaired, modified, changed, released or limited in any manner whatsoever by any impairment, modification, change, release or limitation of the liability of Franchisee or its estate in bankruptcy or of any remedy for enforcement, resulting from the operation of any present or future provision of the U.S. Bankruptcy Act or other statute, or from the decision of any court or agency.
Source: Item 23 — RECEIPTS (FDD pages 55–246)
What This Means (2025 FDD)
According to Deer Solution's 2025 Franchise Disclosure Document, a bankruptcy filing by the franchisee does not impact the personal guaranty. The guaranty remains in effect even if the franchisee, or any assignee or successor, declares bankruptcy or abandons the Franchise Agreement or Ancillary Agreements. The guarantor's obligation to make payments and any enforcement remedies will not be affected by any impairment, modification, or limitation of the franchisee's liability due to bankruptcy laws or court decisions.
This means that even if the Deer Solution franchise itself goes bankrupt, the person who signed the personal guaranty is still responsible for the financial obligations under the Franchise Agreement and any related Ancillary Agreements. This protection extends to Deer Solution regardless of any changes to the franchisee's financial situation or legal standing due to bankruptcy.
For a prospective Deer Solution franchisee, this highlights the significant risk associated with signing a personal guaranty. Even if the franchise fails and declares bankruptcy, the guarantor's personal assets are still at risk to cover the debts of the franchise. It is crucial to fully understand the terms of the guaranty and assess one's financial capacity to cover potential losses before signing the agreement.