Does the Itan franchise agreement specify that the guarantor's liability is joint and several?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree that: (a) your direct and immediate liability under this guaranty is joint and several with Franchisee and all other signatories to this Agreement; (b) you will render any payment required under the Secured Agreements upon demand if Franchisee fails to promptly do so; (c) your liability is not contingent or conditioned upon our pursuit of any remedies against Franchisee or any other Person; and (d) your liability will not be diminished, relieved or otherwise affected by any extension of time, credit or other indulgence we grant to Franchisee or any other Person, including the acceptance of any partial payment or performance, or the compromise or release of any Claims, none of which shall in any way modify or amend this guarantee, which remains continuing and irrevocable during the term of each Secured Agreement and following the termination, expiration or transfer of each Secured Agreement to the extent any financial obligations under a Secured Agreement survive such termination, expiration or transfer.
This guaranty will continue unchanged by the occurrence of any bankruptcy of Franchisee or any assignee or
successor of Franchisee or by any abandonment of one or more of the Secured Agreements by a trustee of Franchisee. Neither your obligation to make payment in accordance with the terms of this undertaking nor any remedy for enforcement will be impaired, modified, released or limited in any manner whatsoever by any impairment, modification, release or limitation of the liability of Franchisee or its estate in bankruptcy or of any remedy for enforcement, resulting from the operation of any present or future provision of the U.S. Bankruptcy Act or other statute, or from the decision of any court or agency.
- 6. REPRESENTATION. You represent to us that you received a copy of the executed Franchise Agreement.
- 7. DISPUTE RESOLUTION. Any dispute between the parties relating to this Agreement shall be brought in accordance with the dispute resolution provisions set forth in the Franchise Agreement, which are incorporated into this Agreement by reference as if fully set forth herein. You acknowledge and agree that your breach of this Agreement constitutes a material event of default under the Franchise Agreement, permitting us to terminate the Franchise Agreement in accordance with its terms.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the Franchise Owner Agreement specifies that the guarantor's liability is joint and several with the franchisee and all other signatories to the agreement. This means that each guarantor is individually and collectively responsible for the full amount of the franchisee's obligations.
This has significant implications for anyone acting as a guarantor for an Itan franchise. If the franchisee defaults on their obligations, Itan can pursue any one or all of the guarantors for the full amount owed, regardless of the individual guarantor's share of ownership or involvement in the business. This is a standard practice in franchising, as it provides the franchisor with greater security in the event of a default.
The agreement also states that the guarantor's liability is not contingent on Itan pursuing remedies against the franchisee first. This means Itan can immediately seek payment from the guarantor without first attempting to recover the debt from the franchisee. Additionally, the guarantor's liability will not be affected by any extensions of time or credit granted to the franchisee, or by any compromise or release of claims. This ensures that the guarantee remains in full force and effect throughout the term of the franchise agreement, even if the terms of the agreement are modified.
Furthermore, the guarantor acknowledges that a breach of the Franchise Owner Agreement constitutes a material event of default under the Franchise Agreement, which could allow Itan to terminate the Franchise Agreement. This highlights the importance of the guarantor understanding the terms of both the Franchise Owner Agreement and the Franchise Agreement itself.