Will an extension of time granted to the Franchisee affect the Guarantor's liability to Desi District?
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 affected by any extension of time that Desi District may grant to the franchisee. The guarantor's obligations remain intact regardless of any amendments to the franchise agreement, extensions of time or credit, or acceptance of partial payments related to the franchisee's performance. This ensures that Desi District can provide franchisees with some flexibility without jeopardizing the guarantor's commitment.
This provision is designed to protect Desi District in the event that the franchisee requires additional time or altered payment schedules. By ensuring the guarantor's liability remains unchanged, Desi District maintains a consistent level of security. The guarantor cannot claim that an extension granted to the franchisee reduces their obligation.
For a prospective Desi District franchisee, this means that if a third party guarantees their obligations, that guarantor will be bound by the original terms, even if Desi District provides some leeway to the franchisee. This is a fairly standard practice in franchising, as it provides the franchisor with added financial security while allowing for some flexibility in managing the franchisee's performance.