For how long does the guarantee of the Franchisee's obligations extend under the Hardees Guarantee and Assumption of Franchisee's Obligations?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
- **1.
Guarantee To Be Bound by Certain Obligations.** Guarantors hereby personally and unconditionally 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 each will be personally bound by the restrictions contained in Section 20 of the Agreement.
- **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.
In addition, if any of the undersigned ceases to be a member of the Continuity Group, a 10% Owner, an officer or director of Franchisee or own any direct or indirect interest in Franchisee or the Franchised Restaurant, that person (and his spouse, if the spouse is also a guarantor) agrees that the obligations under this Guarantee shall continue to remain in force and effect unless HR in its sole discretion, in writing, releases those person(s) from this Guarantee.
Notwithstanding the provisions of the previous sentence, unless prohibited by applicable law, the obligations contained in Section 20.C. of the Agreement shall remain in force and effect for a period of 2 years after any such release by HR.
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees' 2025 Franchise Disclosure Document, the Guarantee and Assumption of Franchisee's Obligations extends for the term of the Franchise Agreement and continues thereafter as specified in the agreement, or as defined by law or equity. This means that the guarantor's obligations are tied to the duration of the franchise agreement itself.
Specifically, the guarantors guarantee that the franchisee will punctually pay and perform every agreement and covenant in the Franchise Agreement, and also pay all other monies owed to Hardees and/or its affiliates. The guarantors also agree to be personally bound by every provision in the agreement, including sections 20 and 25, and to be personally liable for any breaches of the agreement.
Furthermore, the guarantee remains effective even if a guarantor ceases to be a member of the Continuity Group, a 10% Owner, or an officer/director of the franchisee, or if they no longer hold any direct or indirect interest in the franchisee or the franchised restaurant. The only way to be released from this guarantee is if Hardees, in its sole discretion, provides a written release. However, even with such a release, the obligations outlined in Section 20.C of the agreement remain in effect for two years, unless prohibited by law. This indicates that certain post-termination obligations, such as non-compete clauses, may persist for a limited time even after a guarantor is formally released from the broader guarantee.
This extended guarantee has significant implications for potential Hardees franchisees and their guarantors. Individuals considering becoming guarantors should fully understand the scope and duration of their obligations, as they could extend beyond the initial term of the franchise agreement and continue even after they relinquish their ownership or management roles. Prospective franchisees should carefully review the specific terms of the Guarantee and Assumption of Franchisee's Obligations, and seek legal counsel to fully understand their responsibilities and potential liabilities.