Will an amendment of the Desi District Franchise Agreement diminish the Guarantor's liability?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantor agrees that Guarantor's liability hereunder shall not be diminished, relieved or otherwise affected by (a) any amendment of the Franchise Agreement, (b) any extension of time, credit or other indulgence which Desi District Franchise Group may from time-to-time grant to Franchisee or to any other person or entity, or (c) the acceptance of any partial payment or performance or the compromise or release of any claims.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, a Guarantor's liability will not be diminished if the Franchise Agreement is amended. The Guarantor agrees that their liability will not be reduced, relieved, or otherwise affected by any changes to the Franchise Agreement.
This means that even if the Franchise Agreement is modified after the franchise is established, the Guarantor remains fully responsible for the franchisee's obligations. This protection extends to Desi District if they grant the franchisee extensions of time, credit, or other considerations. The Guarantor's obligations remain even if Desi District accepts partial payments or performance, or compromises or releases claims.
This provision is typical in franchising, as franchisors want to ensure that their financial interests are protected. The guarantor's commitment remains steadfast, irrespective of any modifications or leniency the franchisor might extend to the franchisee. Prospective franchisees should carefully consider the implications of this clause and ensure they fully understand the scope of their obligations as a guarantor.