How do renewals of the Floyds 99 Franchise Agreement affect the Guaranty and Assumption of Franchisee's Obligations?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
At the end of the initial term hereof, the Franchisee shall have the option to renew its franchise rights for an additional term, by acquiring successor franchise rights, if the Franchisor does not exercise its right not to offer a successor franchise in accordance with Section 19.5 below and if the Franchisee:
- a. At least 30 days prior to expiration of the term, executes the form of Franchise Agreement then in use by the Franchisor;
- b. Has substantially complied with all provisions of this Agreement during the current term, including the payment on a timely basis of all Royalties, National Marketing Contributions and other fees due hereunder. "Compliance" shall mean, at a minimum, that the Franchisee has not received any written notification from the Franchisor of breach hereunder more than four times during the term hereof;
- c. Upgrades and/or remodels the FLOYD'S 99 Shop and its operations at the Franchisee's sole expense (the necessity of which shall be in the sole discretion of the Franchisor) to conform with the then current Operations Manual;
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
Based on the 2025 Floyds 99 Franchise Disclosure Document, the document does not specify how the renewal of the Franchise Agreement affects the Guaranty and Assumption of Franchisee's Obligations. The FDD does mention that the franchisee has the option to renew the franchise rights for an additional term if certain conditions are met. These conditions include executing the form of Franchise Agreement then in use by Floyds 99 at least 30 days prior to the expiration of the term, substantially complying with all provisions of the existing agreement, and upgrading or remodeling the shop to conform with the current Operations Manual.
While the FDD outlines the conditions for renewal, it does not explicitly state whether the Guaranty and Assumption of Franchisee's Obligations, which is typically signed by a principal of the franchisee to guarantee the franchisee's performance, needs to be renewed or re-executed upon renewal of the franchise agreement. This is a crucial aspect for both the franchisee and any guarantor, as it determines the extent of their obligations during the renewal term.
Prospective franchisees should seek clarification from Floyds 99 regarding the specific requirements for the Guaranty and Assumption of Franchisee's Obligations upon renewal. Specifically, they should inquire whether the existing guaranty remains in effect, whether a new guaranty is required, or if there are any modifications to the terms of the guaranty agreement upon renewal. Understanding these requirements is essential for assessing the full scope of their financial and legal obligations when considering a franchise renewal with Floyds 99.