Are Hardees guarantors personally bound by Section 25 of the Franchise Agreement?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
**2.
Guarantee and Assumption of Franchisee's Obligations.** Guarantors hereby: (A) guarantee to HR and its successors and assigns, for the term of the Agreement and thereafter as provided in the Agreement or at law or in equity, that Franchisee and any assignee of Franchisee's interest under the Agreement shall: (1) punctually pay and perform each and every undertaking, agreement and covenant set forth in the Agreement and (2) punctually pay all other monies owed to HR and/or its affiliates; (B) agree to be personally bound by each and every provision in the Agreement, including, without limitation, the provisions of Sections 20 and 25; and (C) agree to be personally liable for the breach of each and every provision in the Agreement.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, guarantors are personally bound by the provisions outlined in Sections 20 and 25 of the Franchise Agreement. This means that if a franchisee fails to meet their obligations under these sections, the guarantor is held personally liable for the breach. This obligation extends for the term of the agreement and beyond, as specified in the agreement or by law.
Specifically, guarantors agree to be personally bound by each and every provision in the agreement, including Sections 20 and 25. They also agree to be personally liable for any breaches of these provisions. This guarantee ensures that Hardees has recourse to the guarantor's personal assets if the franchisee defaults on their obligations related to these sections.
Section 25 likely pertains to indemnification, where the franchisee agrees to protect Hardees from losses, damages, liabilities, and expenses arising from the operation of the franchised restaurant. The guarantor's agreement to be bound by this section means they are also responsible for covering these costs if the franchisee fails to do so. This arrangement provides Hardees with an additional layer of financial security, as they can pursue the guarantor for compensation if the franchisee is unable to fulfill their indemnification duties.
Prospective Hardees franchisees should carefully consider the implications of the guarantor obligations, as it places significant personal financial risk on the guarantor. It is advisable to seek legal counsel to fully understand the scope of these obligations before entering into the franchise agreement and guarantee.