What is the scope of the guarantee provided by the Guarantors to Hardees regarding the Developer'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 12 of the Agreement.
- **2.
Guarantee and Assumption of Developer'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 Developer and any assignee of Developer'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 12 and 16; and (C) agree to be personally liable for the breach of each and every provision in the Agreement.
Source: Item 23 — Receipts (FDD pages 85–541)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the Guarantors provide two primary guarantees to Hardees regarding the Developer's obligations. First, the Guarantors personally and unconditionally guarantee that they will be bound by the restrictions outlined in Section 12 of the Development Agreement for the term of the agreement and beyond, as legally required. This means the individuals signing as Guarantors are directly responsible for adhering to those specific restrictions.
Second, the Guarantors guarantee that the Developer will fulfill all obligations under the Development Agreement. This includes punctually paying and performing every agreement and covenant detailed in the agreement, as well as paying all monies owed to Hardees and its affiliates. The Guarantors also agree to be personally bound by every provision in the agreement, including Sections 12 and 16, and accept personal liability for any breaches of these provisions.
In essence, these guarantees ensure that Hardees has recourse to the personal assets of the Guarantors if the Developer fails to meet its financial and operational obligations. This is a common practice in franchising, as it provides an additional layer of security for the franchisor. Prospective Hardees developers should carefully review the Development Agreement and Guarantee to fully understand the scope of these obligations and potential liabilities.