Is the Exit franchise agreement binding upon the subfranchisor's successors and assigns?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor's obligations under this Guaranty shall be binding upon Guarantor and its respective successors and assigns and shall remain in full force and effect irrespective of:
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- The validity or enforceability of the Franchise Agreement;
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- Any failure or lack of diligence in collection of any amounts due under the terms of the Franchise Agreement;
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- The acceptance of any security or other guaranty, the extension of any credit or amendments, modifications, consents or waivers with respect to the Franchise Agreement;
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- Any defense that the Franchisee or any other person or entity might have by reason of any action in bankruptcy or other statutory or common law proceedings for debtor relief by Franchisee or any other Guarantor;
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- Any legal or equitable principle of marshaling or other rule of law requiring a creditor to proceed against specific property, apply proceeds in a particular manner or otherwise exercise remedies so as to preserve the several estates of joint obligors or common debtors; and
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- Any act or failure to act with regard to the Franchise Agreement which might vary the risk of the undersigned.
Subfranchisor shall have no obligation to resort in any manner or form for payment from Franchisee or to any other person, firm or entity, their properties or assets or to any security, property or other rights or remedies whatsoever and Franchisor shall have the right to enforce this Guaranty irrespective of whether or not proceedings or steps are pending seeking to resort to or realization on or upon any of the foregoing remedies.
Guarantor agrees to pay Subfranchisor and EXIT and their respective subsidiaries and affiliates, upon demand, all legal and other costs, expenses and fees at any time paid or incurred by each of them in endeavoring to collect any amounts due pursuant to the Franchise Agreement or to
realize upon this Guaranty or to enforce any right under the Franchise Agreement or this Guaranty. This Guaranty is a guaranty of performance and payment and not a guaranty of collection.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Guarantor's obligations under the Guaranty are binding upon the Guarantor and its respective successors and assigns. This remains in full effect regardless of the validity or enforceability of the Franchise Agreement.
This means that if a guarantor is involved in the franchise agreement, their obligations will continue even if the franchise is transferred or assigned to someone else. This provides Exit with a level of security, ensuring that the financial obligations associated with the franchise are met, even if the original guarantor is no longer directly involved.
This clause protects Exit in various scenarios, such as the franchisee declaring bankruptcy or facing other legal proceedings. The guarantor cannot use these situations as a defense to avoid their obligations. The guarantor is also responsible for covering all legal costs and expenses incurred by Exit in their efforts to collect amounts due under the Franchise Agreement or to enforce any rights under the Guaranty.