Under what conditions can the Guaranty for a Fly Fitness franchise be discharged?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantor hereby individually makes, agrees to be bound by, and agrees to perform, all of the monetary obligations and non-competition covenants and agreements of the Franchisee as set forth in the Franchise Agreement, including but not limited to, the covenants set forth in Sections 19.2, 19.5, 19.6, 19.8 and 19.9 of the Franchise Agreement ("Guaranteed Obligations"). Guarantor shall perform and/or make punctual payment to Franchisor of the Guaranteed Obligations in accordance with the terms of the Franchise Agreement or other applicable document forthwith upon demand by Franchisor.
This Guaranty is an absolute and unconditional continuing guaranty of payment and performance of the Guaranteed Obligations. This Guaranty shall not be discharged by renewal of any claims guaranteed by this instrument, change in ownership or control of the Franchisee entity, transfer of the Franchise Agreement, the suffering of any indulgence
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, the Guaranty signed by the spouse of the franchisee's principal is an absolute and unconditional continuing guaranty of payment and performance of the Guaranteed Obligations. This means the guarantor is fully responsible for the franchisee's monetary obligations and non-competition agreements as outlined in specific sections of the Franchise Agreement.
The Guaranty is designed to ensure that Fly Fitness receives payment and performance of these obligations, regardless of certain changes or events. Specifically, the document states that the Guaranty shall not be discharged by renewal of any claims guaranteed by this instrument, change in ownership or control of the Franchisee entity, transfer of the Franchise Agreement, or the suffering of any indulgence.
This clause protects Fly Fitness in various scenarios, such as the franchisee selling the business or being granted leniency on payment deadlines. The guarantor's obligations remain in effect despite these changes, providing Fly Fitness with continuous assurance that the franchisee's financial and competitive responsibilities will be met. Prospective franchisees should carefully consider the implications of this clause and ensure that any guarantor fully understands their obligations before signing the Guaranty.