Does the Gold Star Personal Guaranty cover obligations resulting from bankruptcy or insolvency of the Company?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
The undersigned expressly waive(s) any and all notices and demands. This Personal Guaranty will not be affected by the modification, extension, or renewal of any agreement between Franchisor and Company, the taking of a note or other obligation from Company or others, the taking of security for payment, the granting of extension(s) of time for payment, the filing by or against Company of bankruptcy, insolvency, reorganization or other debtor's relief afforded Company pursuant to the present or future provision of the Federal Bankruptcy Act or any other state or federal statute or by the decision of any court, or any other matter, whether similar or dissimilar to any of the foregoing; and this Personal Guaranty will cover the terms and obligations of any such modifications, notes, security agreements, extensions, or renewals. The obligations of the undersigned will be unconditional, notwithstanding any defect in the genuineness, validity, regularity, or enforceability of the Company's obligations or liability to Franchisor, or any other circumstances whether or not referred to herein, which might otherwise constitute a legal or equitable discharge of a surety or guarantor.
This is a continuing, irrevocable, unconditional and absolute guaranty of payment and performance and the undersigned agree(s) that the undersigned's liability on this Personal Guaranty will be immediate and is not contingent upon the exercise or enforcement by Franchisor of whatever remedies it may have against Company or others, or the enforcement of any lien or realization upon any security Franchisor may at any time possess.
The undersigned further covenant(s) and agree(s) that as long as Company owes any monies to Franchisor (other than royalty and advertising fee payments that are not past due), Company will not pay, and the undersigned will not accept, payment of any part of any indebtedness owed by Company to the undersigned, or any one of the undersigned if more than one person, either directly or indirectly, without the consent of Franchisor.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, the Personal Guaranty is not affected by the bankruptcy or insolvency of the Company. The guarantor expressly waives any notices or demands related to such events. This means that even if the franchisee's company faces bankruptcy, insolvency, or reorganization, the personal guarantor's obligations to Gold Star remain in full effect.
The Personal Guaranty covers all obligations of the Company to Gold Star, including those arising from the Franchise Agreement or any other agreement between them. This includes any modifications, extensions, or renewals of these agreements. The guarantor's obligations are unconditional, regardless of any defects in the Company's obligations or any circumstances that might otherwise discharge a surety or guarantor.
The guaranty is a continuing, irrevocable, unconditional, and absolute guarantee of payment and performance. The guarantor's liability is immediate and not contingent upon Gold Star exercising its remedies against the Company. Furthermore, as long as the Company owes money to Gold Star (excluding current royalty and advertising fee payments), the Company cannot repay any debts it owes to the guarantor without Gold Star's consent. This ensures that Gold Star's financial interests are prioritized over the guarantor's in the event of financial difficulties.