If the Monicals Pizza Franchise Agreement is transferred, does the Guarantor's obligation continue?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor or an Affiliate, as applicable, and Franchisee, without notice to or consent by Guarantor, may at any time(s) enter into modifications, renewals, extensions, amendments and/or other agreements respecting the Franchise Agreement or any Related Agreement, and Guarantor shall not be wholly or partially released thereby, it being intended that Guarantor shall continue as guarantor with respect to the Franchise Agreement and each Related Agreement as so modified, renewed, extended, amended or otherwise affected and notwithstanding any transfer or assignment of the Franchise Agreement or any Related Agreement.
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, the Guarantor's obligations continue even if the Franchise Agreement is transferred. The Guarantor is still responsible for the franchisee's obligations under the Franchise Agreement and any related agreements, regardless of any transfer or assignment.
Specifically, the FDD states that the guarantor isn't released even if the Franchise Agreement is modified, renewed, extended, amended, or otherwise affected, and this includes any transfer or assignment of the Franchise Agreement or any Related Agreement. This means that if a franchisee sells their Monicals Pizza franchise to a new owner, the guarantor for the original franchisee remains liable for the new franchisee's performance and payments under the agreement.
This provision protects Monicals Pizza by ensuring that there is always a party responsible for fulfilling the financial and operational obligations of the franchise, even if the original franchisee exits the business. For a potential guarantor, this highlights the importance of carefully assessing the risks associated with the franchise and the financial stability of the franchisee, as their obligations extend beyond the initial term and ownership of the franchise.