After the Itan franchise agreement is terminated, expires, or is transferred, what financial obligations remain for the franchisee?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
: (i) acceptance and notice of acceptance by us of the foregoing undertakings; (ii) notice of demand for payment of any indebtedness guaranteed; (iii) protest and notice of default to any party with respect to the indebtedness guaranteed; (iv) any right you may have to require that an action be brought against Franchisee or any other Person as a condition of liability; and (v) the defense of the statute of limitations in any action hereunder or for the collection of any indebtedness hereby guaranteed. 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.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, certain financial obligations may survive the termination, expiration, or transfer of the Franchise Agreement. Specifically, if a guarantor has signed an agreement to secure the franchisee's financial obligations, that guarantor's liability continues even after the termination, expiration, or transfer of the agreement, to the extent that any financial obligations under a secured agreement remain. This ensures that Itan can still pursue payments required under the secured agreements, even if the franchisee fails to pay.
The guarantor's obligations are not contingent on Itan pursuing remedies against the franchisee first, and the guarantor's liability won't be affected by any extensions of time or credit granted to the franchisee. This means the guarantor remains fully responsible for the franchisee's financial obligations, regardless of any arrangements between Itan and the franchisee. The guarantee remains in effect during the term of each secured agreement and continues after termination, expiration, or transfer, as long as financial obligations survive.
Furthermore, the survival clause in Section 24.11 of the Franchise Agreement states that provisions that expressly or by their nature survive termination, expiration, or transfer of the agreement will remain in effect. This includes sections related to financial obligations, ensuring that these responsibilities continue even after the franchise agreement is no longer active. This is a common practice in franchising to protect the franchisor's financial interests and ensure all outstanding debts and obligations are fulfilled, even after the franchisee exits the system.