For Learningrx, who can enforce the Guaranty agreement?
Learningrx Franchise · 2025 FDDAnswer from 2025 FDD Document
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ATTACHMENT V(b) TO FRANCHISE AGREEMENT
SPOUSAL AND DOMESTIC PARTNER GUARANTY AND ASSUMPTION OF OBLIGATIONS
| | 2023 | 2022 | | |---|---|---|---| | Retained Earnings, Beginning of Year | $ 7 66,025 | | $ 8 21,066 | | Net Income (Loss) | 7,181 | (55,041) | | | Retained Earnings, End of Year | $ 7 73,206 | | $ 7 66,025 | In consideration of, and as inducement to, the execution of that certain Franchise Agreement of even date herewith (the "Agreement") by LearningRx Franchise Corporation (the "Franchisor") and the party or parties identified on the Agreement (the "Franchisee"), and acknowledging that Franchisor would not be willing to enter into the Agreement without the commitment of each spouse or domestic partner of Franchisee's owner to guarantee the performance of the Franchisee, each of the undersigned hereby personally and unconditionally (a) guarantees to Franchisor, and its successors and assigns, for the term of the Agreement and thereafter as provided in the Agreement, that the Franchisee shall punctually pay and perform each and every undertaking, agreement and covenant set forth in the Agreement; and (b) agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Agreement, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities. Notwithstanding clauses (a) and (b) above, a spouse or domestic partner who is also a guarantor hereunder and who becomes widowed and who does not have (and will not obtain) an ownership interest in the Franchisee, the Agreement, or any Franchise Agreement granted thereunder as an owner, co-owner, investor, member, partner, shareholder or like capacity shall not thereafter be held responsible for any monetary obligations thereafter arising out of the terms and conditions of this Guaranty and Assumption of Obligations unless any such ownership interest is acquired in any manner by the widowed spouse or domestic partner, or the widowed spouse's children, deceased spouse's children, or domestic partner's children. Notwithstanding any change in ownership resulting from the death of a spouse or domestic partner, all monetary obligations and liabilities existing at the time of death shall continue to be an obligation of the surviving spouse or domestic partner until such obligations or liabilities shall be paid in full by the estate or by the guarantor spouse or domestic partner.
Source: Item 23 — RECEIPT (FDD pages 54–209)
What This Means (2025 FDD)
According to Learningrx's 2025 Franchise Disclosure Document, the Guaranty agreement is enforceable by Learningrx Franchise Corporation, its successors, and assigns. This means that not only can Learningrx itself enforce the agreement, but also any entity that legally takes over Learningrx's rights or responsibilities, such as a company that acquires Learningrx. The agreement ensures that the obligations of the franchisee are guaranteed, often by a spouse or domestic partner, to ensure the financial and operational commitments are met.
This enforceability extends to the administrators, executors, successors, and assigns of the guarantors as well. Therefore, even if a guarantor dies, their estate remains liable under the Guaranty. This provision ensures Learningrx can pursue the guarantor's estate to fulfill the obligations under the franchise agreement. The document also specifies that if there are multiple guarantors, their liability is joint and several, meaning each guarantor is fully responsible for the entire obligation.
For a prospective Learningrx franchisee, this has significant implications. Spouses or domestic partners asked to sign a Guaranty should understand they are making a legally binding commitment that could extend beyond the term of the agreement and even beyond their lifetime. It is crucial to seek legal counsel to fully understand the extent of this obligation. Furthermore, franchisees should be aware that Learningrx has broad rights to transfer or assign the franchise agreement, and with it, the right to enforce the Guaranty.