Is the liability of each guarantor under the Fat Shack Guaranty joint, several, or both?

According to Fat Shack's 2025 Franchise Disclosure Document, the liability of each guarantor is joint and several. Specifically, Exhibit V to the Franchise Agreement and Exhibit B to the Development Agreement state that each guarantor's direct and immediate liability under the guaranty will be joint and several. This means that Fat Shack can pursue any one guarantor for the full amount of the obligation, regardless of whether other guarantors exist or their ability to pay.

For a prospective Fat Shack franchisee, this has significant implications. If multiple individuals act as guarantors (for example, in a partnership or multi-member LLC), each guarantor is fully responsible for the entire debt. Fat Shack is not required to pursue all guarantors equally or proportionally. They can choose to pursue the guarantor with the most accessible assets.

This clause protects Fat Shack by ensuring they have multiple avenues to recover any losses should the franchisee default. However, it places a significant risk on each individual guarantor, as they could be held liable for the entire debt even if other guarantors are involved. Prospective franchisees should carefully consider the financial implications and risks before agreeing to act as a guarantor, and understand that their personal assets are at risk. It is advisable to seek legal counsel to fully understand the scope of this liability.