Who must execute a written guaranty for a Hck Hot Chicken franchise after a transfer to an entity, and what does it guarantee?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR VALUE RECEIVED, and in consideration of Hot Chikn Kitchn LLC, a Florida limited liability company ("Franchisor"), [granting a franchise][or][approving a transfer] to [FRANCHISEE], a [STATE ENTITY TYPE] ("Franchisee"), the undersigned, [FRANCHISEE OWNERS] (jointly and severally, "Guarantor"), agree as follows:
1. Guaranty of Obligations.
- 1.1 Guarantor unconditionally, absolutely and irrevocably guarantees the full and prompt payment and performance when due, of all obligations of Franchisee to Franchisor and its affiliates, however created, arising or evidenced, whether direct or indirect, absolute or contingent, or now or in the future existing or due or to become due, including, without limitation, under or in connection with that certain Franchise Agreement dated as of even date herewith (the "Franchise Agreement") and each of the documents, instruments and agreements executed and delivered in connection with the Franchise Agreement or this continuing guaranty, as each may be modified, amended, supplemented or replaced from time to time (all such obligations are referred to collectively as the "Obligations"), and all documents evidencing or securing any of the Obligations.
This continuing guaranty (this "Continuing Guaranty") is a guaranty of payment and performance when due and not of collection.
- 1.2 In the event of any default by Franchisee in making payment of, or default by Franchisee in performance of, any of the Obligations, Guarantor agrees on demand by Franchisor to pay and perform all of the Obligations as are then or thereafter become due and owing or are to be performed under the terms of the Obligations.
Guarantor further agrees to pay all expenses (including reasonable attorneys' fees and expenses) paid or incurred by Franchisor in endeavoring to collect the Obligations, or any part thereof, and in enforcing this Continuing Guaranty.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, if a franchise is granted or transferred to an entity, the franchisee owners, referred to as the Guarantor, must execute a Continuing Guaranty. This guaranty ensures the franchisee's full and prompt payment and performance of all obligations to Hck Hot Chicken and its affiliates.
The obligations covered by the guaranty include all debts and duties arising from the Franchise Agreement and related documents. This encompasses both direct and indirect financial responsibilities, whether absolute or contingent, existing now or in the future. The Continuing Guaranty is a guarantee of payment and performance, not merely of collection, meaning the Guarantor is immediately responsible if the franchisee defaults.
Specifically, if the Hck Hot Chicken franchisee fails to make payments or perform any obligations, the Guarantor must, upon demand from Hck Hot Chicken, fulfill those obligations. Furthermore, the Guarantor is responsible for covering all expenses, including reasonable attorney's fees, incurred by Hck Hot Chicken in its efforts to collect the debts or enforce the Continuing Guaranty. This ensures that Hck Hot Chicken can recover any costs associated with enforcing the agreement.
This requirement protects Hck Hot Chicken by ensuring that there is a responsible party (the owners) who are personally liable for the financial and operational obligations of the franchise, even if the franchise is operated through a corporate entity. This is a common practice in franchising to provide additional security to the franchisor.