What is the consequence of breaching the Franchise Agreement for a Monicals Pizza franchise when a personal guarantee is in place?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
eement.
Guarantor will forthwith pay to Franchisor and/or an Affiliate, as applicable, all attorney's fees and disbursements incurred by Franchisor and/or an Affiliate, as applicable, in connection with any breach or default by Franchisee under the Franchise Agreement or any Related Agreement and/or the enforcement of this Guaranty Agreement, in each instance whether or not suit is brought (and if suit is brought, through appeals and collection efforts).
Any sums not paid to Franchisor or any Affiliate when due hereunder will bear interest at the rate of 18% per annum, from the due date until full payment is received by Franchisor or such Affiliate.
As a further inducement to Franchisor to make and enter into the Franchise Agreement and in consideration thereof, Guarantor agrees that in any action or proceeding brought on, under or by virtue by this Guaranty Agreement, Guarantor shall and does hereby waive trial by jury and the benefit of any statute of limitations defense, and Guarantor agrees that the applicable courts of Illinois may have jurisdiction over Guarantor upon appropriate service on Guarantor anywhere in the United States in a manner in accordance with the laws of Illinois.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 31–32)
What This Means (2025 FDD)
According to the 2025 Monicals Pizza Franchise Disclosure Document, if a franchisee breaches the Franchise Agreement or any related agreement and a personal guarantee is in place, the guarantor is responsible for covering all associated costs. This means the guarantor must promptly pay Monicals Pizza or its affiliates for all attorney's fees and disbursements incurred due to the franchisee's breach or default. This obligation applies whether or not a lawsuit is filed and extends through appeals and collection efforts. This ensures Monicals Pizza can recover legal expenses resulting from the franchisee's non-compliance.
Furthermore, any sums not paid when due will accrue interest at a rate of 18% per annum, calculated from the due date until full payment is received by Monicals Pizza or its affiliate. This high-interest rate serves as a deterrent against delayed payments and increases the financial burden on the guarantor for any outstanding amounts. The guarantor's obligations are comprehensive, covering not only the initial breach but also the costs and interest associated with enforcing the guarantee.
The Guaranty Agreement is governed by Illinois law and binds the guarantor's legal or personal representatives, heirs, successors, and assigns. This ensures that the obligations under the guarantee extend beyond the original guarantor, providing Monicals Pizza with continued protection even in cases of inheritance or business transfers. The agreement benefits Monicals Pizza, its affiliates, and anyone else holding rights under the Franchise Agreement, reinforcing the security provided by the personal guarantee.