Under the Guaranty and Assumption of Obligations for Jersey Mikes, what is the definition of 'Indebtedness'?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
| 1. | In consideration of, and as an inducement to, the execution of the Note of even date herewith (the |
|---|---|
| "Note") by Jersey Mike's Franchise Systems, LLC ("Holder"), [] (the | |
| "Guarantors") hereby personally and unconditionally guarantee the punctual payment when due of | |
| all obligations of [] (the "Maker") to Holder now or hereafter existing under the | |
| Note, whether for principal, interest, fees or otherwise (such obligations, the "Indebtedness", and | |
| such guaranty, the "Guaranty"). Maker and Holder acknowledge and agree that the e xecution of | |
| this Guaranty by the Guarantors is a material inducement to Holder to execute the Note and that | |
| Holder would not have executed the Note without this Guaranty. | |
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mike's 2025 Franchise Disclosure Document, the term 'Indebtedness' within the Guaranty and Assumption of Obligations refers to all obligations of the Maker to the Holder, whether currently existing or arising in the future, under the Note. This encompasses principal, interest, fees, and any other financial responsibilities outlined in the Note.
In simpler terms, 'Indebtedness' represents the total amount of money the borrower (Maker) owes to the lender (Holder) based on the terms of the Note. This definition is crucial because the Guarantors are personally guaranteeing the punctual payment of all these obligations. The franchisor, Jersey Mike's Franchise Systems, LLC, requires this guarantee to proceed with the Note, emphasizing its importance in their agreement.
For a prospective Jersey Mike's franchisee, understanding this definition is vital. If you are asked to be a Guarantor, you are committing to cover all financial obligations of the borrower, including principal, interest, and fees, should they fail to pay. This guarantee is a material inducement for the Holder to execute the Note, meaning they likely would not proceed without it. Therefore, before signing a Guaranty and Assumption of Obligations, it is essential to fully understand the scope of the 'Indebtedness' you are guaranteeing.