Is the Hck Hot Chicken Guaranty a guaranty of payment or a guaranty of collection?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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 Continuing Guaranty is a guaranty of payment and performance when due, and not of collection. This means that the guarantor is responsible for ensuring that all obligations to Hck Hot Chicken are paid and performed on time.
In practical terms, if the franchisee fails to make a payment or fulfill any other obligation, Hck Hot Chicken can immediately seek payment or performance from the guarantor without first attempting to collect from the franchisee. This provides Hck Hot Chicken with a direct and immediate recourse in case of franchisee default.
The guarantor also agrees to cover all expenses, including reasonable attorney's fees, incurred by Hck Hot Chicken in its efforts to collect the obligations or enforce the Continuing Guaranty. This further protects Hck Hot Chicken's financial interests and ensures that the guarantor bears the full cost of any default by the franchisee.
This type of guaranty is more favorable to the franchisor, Hck Hot Chicken, as it simplifies and expedites the process of recovering payments or ensuring performance. Prospective guarantors should understand the full extent of their obligations and potential liabilities before signing the Continuing Guaranty.