Under the Dq Treat operating agreement, are the liabilities or obligations arising under the guarantee diminished by the insolvency of the Licensee?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
The Guarantors individually and collectively agree that each and every provision, covenant, and condition of this Guarantee inure to the benefit of Company's successors and assigns and that any liability or obligations arising under this Guarantee are not diminished or relieved by the insolvency, bankruptcy, or reorganization of Licensee or of Licensee's successors and assigns.
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to Dq Treat's 2025 Franchise Disclosure Document, the liabilities or obligations arising under the guarantee are not diminished or relieved by the insolvency, bankruptcy, or reorganization of the Licensee or of Licensee's successors and assigns. This means that even if the Dq Treat franchisee declares bankruptcy, the guarantors are still responsible for the obligations under the guarantee.
The guarantors individually and collectively agree that each and every provision, covenant, and condition of this Guarantee inure to the benefit of Dq Treat's successors and assigns. This ensures that the obligations under the guarantee remain intact even if the Dq Treat franchise is transferred or assigned to a new entity.
This clause protects Dq Treat by ensuring that the financial obligations outlined in the operating agreement are met regardless of the franchisee's financial status. Prospective franchisees should carefully consider the implications of this guarantee, especially if they are signing as guarantors, as their personal assets could be at risk even in the event of the business's insolvency.