Under the Monicals Pizza Unlimited Guaranty, what is the effect of a transfer or assignment of the Development Agreement on the Guarantor's obligations?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor agrees that (1) its obligations hereunder shall be enforceable against Guarantor without the necessity for any suit or proceedings whatsoever against Developer, and without the necessity of any notice of nonpayment, nonperformance or nonobservance or any notice of acceptance of this Guaranty Agreement or any other notice or demand to which Guarantor might otherwise be entitled, all of which Guarantor hereby expressly waives; (2) immediately upon each and every breach or default of the Development Agreement or any Related Agreement by Developer, whether before or during the term of the Development Agreement or any Related Agreement or thereafter (e.g., during any renewal term), without any notice to or demand upon Guarantor, Guarantor will (i) pay to Franchisor or an Affiliate as applicable, the sum or sums in arrears, (ii) pay to Franchisor or an Affiliate, as applicable, all damages, including but not limited to any expenses, costs and fees incurred by Franchisor or an Affiliate, as applicable,, that may be occasioned by Developer's nonperformance, and (iii) comply with or perform all terms and conditions of the Development Agreement and each Related Agreement; (3) no extension, forbearance or leniency extended by Franchisor or any Affiliate to Developer shall wholly or partially discharge Guarantor hereunder, notwithstanding that Guarantor had no notice of any breach or default of the Development Agreement or any Related Agreement or of any such leniency, forbearance or extension; (4) Franchisor or an Affiliate, as applicable, and Developer, without notice to or consent by Guarantor, may at any time(s) enter into modifications, renewals, extensions, amendments and/or other agreements respecting the Development 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 Development Agreement and each Related Agreement as so modified, renewed, extended, amended or otherwise affected and notwithstanding any transfer or assignment of the Development 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 Unlimited Guaranty and Assumption of Obligations signed by holders of a 5% or greater interest in the Developer requires them to assume and discharge all of the Developer's obligations under the Development Agreement. The guarantor's obligations remain even if the Development Agreement is transferred or assigned.
Specifically, the guarantor is not released from their obligations if Monicals Pizza and the Developer modify, renew, extend, amend, or otherwise alter the Development Agreement or any related agreements. This holds true regardless of whether the guarantor is notified or consents to these changes. The guarantor continues to be responsible as if no changes or transfers occurred.
This means that even if the Development Agreement is sold or transferred to another party, the guarantor's responsibility for the original developer's obligations remains intact. This provision ensures that Monicals Pizza has a continuous guarantee of performance, regardless of changes in the ownership or structure of the development entity. The guarantor's obligations are co-extensive with those of the developer and remain in effect as long as the developer's obligations are in effect.