Is the Kitchen Solvers guarantor's liability joint and several with the developer?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Guarantor hereby consents and agrees that:
- (a) Guarantor's liability under this undertaking is direct, immediate, and independent of the liability of, and is joint and several with, Developer and the other parties who may be held liable for Developer's performance of the ADA;
- (b) Guarantor will render any payment or performance required under the ADA upon demand if Developer fails or refuses punctually to do so;
- (c) Franchisor is entitled to proceed against Guarantor and Developer jointly and severally, or Franchisor may, at its option, proceed against Guarantor, without having commenced any action or having obtained any judgment against Developer; and
- (d) Guarantor agrees to pay all reasonable attorneys' fees and all costs and other expenses incurred in any collection or attempt to collect amounts due pursuant to this undertaking (including any amounts expended in pursuing payment from Developer) or any negotiations relative to the obligations hereby guaranteed or in enforcing this undertaking against Guarantor.
Source: Item 23 — Receipts (FDD pages 49–190)
What This Means (2025 FDD)
According to Kitchen Solvers' 2025 Franchise Disclosure Document, the guarantor's liability is joint and several with the developer. This means that the guarantor is equally responsible for the developer's obligations under the Area Development Agreement (ADA). Kitchen Solvers can pursue the guarantor directly for any payment or performance required if the developer fails to fulfill their obligations.
This arrangement benefits Kitchen Solvers by providing an additional layer of security and assurance that the obligations under the ADA will be met. It also allows Kitchen Solvers to pursue either the developer or the guarantor, or both, to ensure compliance with the agreement. The guarantor cannot require Kitchen Solvers to first pursue action against the developer before seeking recourse from the guarantor.
For a prospective Kitchen Solvers franchisee acting as a guarantor, this clause carries significant implications. The guarantor's personal assets are at risk should the developer default on their obligations. It is crucial for potential guarantors to fully understand the terms of the ADA and the financial capabilities of the developer before agreeing to act as a guarantor. They should also seek legal counsel to fully understand the extent of their liability.
This type of guarantee is a common practice in franchising, especially when the franchisee is a newly formed entity or lacks a substantial operating history. Franchisors like Kitchen Solvers use guarantees to mitigate their risk and ensure that there is a responsible party with sufficient assets to back the franchisee's obligations.