Where can I find the definition of 'Guarantor(s)' in the Lees Famous Recipe franchise agreement?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
- B.
Non-Solicitation of Customers.
You, and each Principal Owner, covenant that, during the term of this Agreement, and for a period of two (2) years thereafter, you and Guarantor will not, directly or indirectly divert or attempt to divert any business, account or customer of the Restaurant or any other Lee's Famous Recipe Restaurants or the System to any Competing Business.
Source: Item 22 — CONTRACTS (FDD pages 69–70)
What This Means (2025 FDD)
The 2025 Lees Famous Recipe Franchise Disclosure Document (FDD) does not explicitly define the term 'Guarantor(s)' within the provided excerpts of Item 22, which covers contract definitions. However, the term 'Guarantor' is mentioned in the context of non-solicitation agreements. Specifically, it states that during the term of the agreement and for two years after, the franchisee, each Principal Owner, and the Guarantor will not divert business from Lees Famous Recipe to a competing business.
This implies that a 'Guarantor' is a party, separate from the franchisee and principal owners, who assumes some responsibility or obligation related to the franchise agreement, particularly concerning non-competition and non-solicitation. It is common in franchising for a franchisor to require a personal guarantee from major stakeholders to ensure the franchisee fulfills their contractual obligations. This is especially true if the franchisee is a corporate entity with limited assets.
Since the FDD excerpt does not provide a specific definition, a prospective Lees Famous Recipe franchisee should seek clarification from the franchisor regarding who is required to act as a guarantor, what specific obligations the guarantor is responsible for, and the extent of the guarantor's liability. Understanding the role and responsibilities of a guarantor is crucial before signing the franchise agreement.