Are the Guarantors of a Gokhale Method franchise required to be notified of any demand for payment by the Franchisee?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
The Guarantors hereby waive any right to require Franchisor to: (a) proceed against Franchisee for any payment required under the Agreement; (b) proceed against or exhaust any security from Franchisee; or (c) pursue or exhaust any remedy, including any legal or equitable relief, against Franchisee. Without affecting the obligations of the Guarantors under this Guarantee, Franchisor may, without notice to the Guarantors, extend, modify, or release any indebtedness or obligation of Franchisee, or settle, adjust, or compromise any claims against Franchisee. The Guarantors waive notice of amendment of the Agreement and notice of demand for payment by Franchisee, and agree to be bound by any and all such amendments and changes to the Agreement.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, Guarantors are not required to be notified of any demand for payment by the Franchisee. The Guarantors, by signing the guarantee, waive their right to receive notice of demand for payment from the Franchisee. This means that Gokhale Method can demand payment directly from the Guarantors without informing them that the Franchisee has failed to pay.
The guarantee ensures that the Guarantors unconditionally guarantee that all of the Franchisee's obligations to Gokhale Method will be paid and performed. The Guarantors also agree to make each payment to Gokhale Method immediately upon demand. This protects Gokhale Method by allowing them to seek payment directly from the Guarantors without first pursuing the Franchisee.
This arrangement is common in franchising, as it provides the franchisor with an additional layer of financial security. However, it places a significant responsibility on the Guarantors, who should be fully aware of the Franchisee's financial obligations and their own potential liability. Prospective Gokhale Method franchisees should carefully consider the implications of this guarantee and seek legal advice before signing any agreements.