For Hck Hot Chicken, what expenses is the Guarantor responsible for in the event of a default by the Franchisee?
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, the Guarantor plays a crucial role in ensuring the financial and operational commitments of the franchisee are met. The Guarantor unconditionally guarantees the full and prompt payment and performance of all the franchisee's obligations to Hck Hot Chicken and its affiliates. These obligations encompass all debts, duties, and liabilities arising from the Franchise Agreement and related documents. This includes any modifications, amendments, or supplements to these agreements. The guaranty covers both existing and future obligations, whether direct or indirect, absolute or contingent. This ensures that Hck Hot Chicken has a secure recourse in case the franchisee fails to meet their responsibilities.
In the event the franchisee defaults on any payment or performance obligations, the Guarantor is obligated to fulfill these obligations upon demand from Hck Hot Chicken. This includes paying all amounts due and performing all actions required under the terms of the franchise agreement. Furthermore, the Guarantor is responsible for covering all expenses incurred by Hck Hot Chicken in its efforts to collect the obligations or enforce the Continuing Guaranty. These expenses specifically include reasonable attorneys' fees and other related costs. This provision ensures that Hck Hot Chicken can pursue necessary legal actions without incurring additional financial burdens.
The Continuing Guaranty is designed as a guaranty of payment and performance, not merely of collection. This distinction is significant because it means that Hck Hot Chicken can immediately seek recourse from the Guarantor if the franchisee defaults, without first having to exhaust all possible remedies against the franchisee. This provides Hck Hot Chicken with a more direct and efficient means of securing its financial interests and ensuring compliance with the franchise agreement. The Guarantor's commitment remains in effect throughout the term of the Franchise Agreement, providing ongoing security and assurance to Hck Hot Chicken.