Does modification or extension of the Note impair the Flowerama Guaranty?
Flowerama Franchise · 2024 FDDAnswer from 2024 FDD Document
Principal also agrees: (a) that the liability of Principal is DIRECT, ABSOLUTE AND UNCONDITIONAL and may be enforced without (i) requiring Lender first to resort to any other right, remedy or security or (ii) regard to the validity, regularity or enforceability of any obligation or purported obligation of Borrower under the Note or otherwise; (b) that this Guaranty shall not be impaired by any modification or extension of the Note or any other agreement between Borrower and Lender, nor by any modification or release of any of the obligations hereby guaranteed or of any security therefor, nor by any agreement or arrangement whatsoever with Borrower or anyone else; (c) that Principal shall be liable to Lender for all attorneys' fees and costs incurred by Lender by reason of this Guaranty or in connection with or arising out of or in enforcing any rights granted Lender hereunder or in any respect relating to the Note; (d) that Principal shall not have any right of subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to security for the debts and obligations of Borrower to Lender, unless and until all of Borrower's obligations in respect of the Note have been paid in full; (e) that if Borrower or Principal shall at any time become insolvent or make a general assignment or if a petition in bankruptcy or any insolvency or reorganization proceedings shall be filed or commenced by or against Borrower or Principal, any and all obligations of Principal shall, at Lender's option, become immediately due and payable without notice; (f) that this Guaranty is, as to Principal, a continuing Guaranty that shall remain effective until all obligations of Borrower to Lender shall be paid in full; (g) that nothing shall discharge or satisfy the liability of Principal except the full payment and performance of all Borrower's debts and obligations to Lender in respect of the Note; (h) that any and all present and future debts and obligations of Borrower to Principal are hereby waived and postponed in favor of and subordinated to the full payment and performance of all present and future debts and obligations of Borrower to Lender.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 72–77)
What This Means (2024 FDD)
According to Flowerama's 2024 Franchise Disclosure Document, the Guaranty provided by the Principal is not impaired by any changes to the Promissory Note. The Principal's liability remains direct, absolute, and unconditional, regardless of any modifications or extensions made to the Note or any other agreements between the Borrower and the Lender (Flowerama). This means that even if the terms of the loan are altered, the Principal is still responsible for ensuring the debt is repaid.
This clause protects Flowerama by ensuring that the Guaranty remains in effect even if the loan terms are adjusted. It also means that Flowerama does not have to pursue other options or consider the validity of the Borrower's obligations before enforcing the Guaranty. The Principal waives rights to subrogation, reimbursement, or indemnity until the Borrower's obligations are fully paid.
For a prospective Flowerama franchisee, this highlights the importance of understanding the full extent of any personal guarantees required. The franchisee should carefully consider the financial implications and risks associated with providing such a guarantee, as modifications to the loan terms will not release them from their obligations. It is advisable to seek legal counsel to fully understand the implications of the Guaranty before signing any agreements.