What is the purpose of the Monicals Pizza Unlimited Guaranty and Assumption of Obligations?

According to the 2025 Monicals Pizza Franchise Disclosure Document, the Unlimited Guaranty and Assumption of Obligations serves to ensure that certain individuals with a significant financial stake in the franchisee entity personally guarantee the franchisee's obligations under the Franchise Agreement. Specifically, all holders of a legal or beneficial interest of five percent (5%) or greater in the franchisee are required to execute this guaranty. By signing this document, these individuals agree to assume and fulfill all of the franchisee's responsibilities outlined in the Franchise Agreement, making them personally liable for these obligations.

This requirement has significant implications for prospective Monicals Pizza franchisees. If the franchisee is a corporate entity or a limited liability company, the franchisor, Monicals Pizza, seeks to obtain personal guarantees from the individuals who have a substantial ownership stake in the franchisee. This ensures that Monicals Pizza has recourse to the personal assets of these individuals should the franchisee fail to meet its financial or contractual obligations. This is a common practice in franchising, as it provides an additional layer of security for the franchisor.

The Unlimited Guaranty and Assumption of Obligations is attached as Exhibit 3 to the Franchise Agreement. The document itself indicates that it is made in connection with the Franchise Agreement between Monical Pizza Corporation, as the Franchisor, and the franchisee. The guarantor agrees to unconditionally guarantee to Monicals Pizza the full and timely performance of the Development Agreement and each related Agreement and all terms, conditions and covenants thereof, and the payment by Developer of royalties and all other sums.

Prospective franchisees should carefully review Exhibit 3 and understand the full extent of the personal liability they are undertaking. They should also seek legal counsel to fully understand the implications of signing such a guarantee. Franchisees should also be aware that any sums not paid to Monicals Pizza or any affiliate when due will bear interest at a rate of 18% per annum from the due date until full payment is received.