Does the transfer or assignment of the Gokhale Method Guarantee by the Franchisor terminate the Guarantee?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
This Guarantee shall terminate upon the termination or expiration of the Agreement or upon the transfer or assignment of the Agreement by Franchisee, except that all obligations and liabilities of the Guarantors which arose from events which occurred on or before the effective date of such termination, expiration, transfer, or assignment of the Agreement shall remain in full force and effect until satisfied or discharged by the Guarantors, and all covenants which by their terms continue in force after the termination, expiration, transfer, or assignment of the Agreement shall remain in force according to their terms. This Guarantee shall not terminate upon the transfer or assignment of the Agreement or this Guarantee by Franchisor. Upon the death of an individual guarantor, the estate of such guarantor shall be bound by this Guarantee, but only for defaults and obligations hereunder existing at the time of death; and the obligations of the other guarantors will continue in full force and effect.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to Gokhale Method's 2024 Franchise Disclosure Document, the transfer or assignment of the Guarantee by the franchisor does not terminate the Guarantee. The guarantor remains bound by the agreement even if Gokhale Method transfers or assigns it.
However, the Guarantee does terminate under other circumstances. It terminates upon the termination or expiration of the Franchise Agreement, or if the franchisee transfers or assigns the agreement. Even in these cases, the obligations and liabilities of the guarantors that arose before the termination, expiration, transfer, or assignment remain in effect until they are satisfied or discharged. Additionally, any covenants that are meant to continue after the termination, expiration, transfer, or assignment of the agreement will remain in force according to their terms.
In the event of the death of an individual guarantor, their estate will be responsible for defaults and obligations existing at the time of death, while the obligations of the other guarantors will continue in full force and effect. This ensures that Gokhale Method has recourse for any outstanding liabilities even after a guarantor's death. Prospective franchisees should carefully consider the implications of the guarantee and ensure they understand their obligations and potential liabilities.