Is the Guarantor personally liable for breaches of the Stretch Zone franchise agreement?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
The Guarantor agrees for the benefit of the Franchisor and its affiliates as follows:
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- Guaranteed Obligations. The Guarantor absolutely and unconditionally, guarantees to the Franchisor and its affiliates, and their respective successors and assigns, for the respective terms of the Agreements and thereafter as provided in the Agreements, that the Franchisee will punctually pay and perform every obligation stated in the Agreements, and the Guarantor agrees to be personally bound by, and personally liable for the breach of, every term of the Agreements, together with charges, fees and all expenses, including attorneys' fees and costs incurred in enforcing the terms of the Agreements or this Guaranty through litigation, arbitration, appellate, bankruptcy and post-judgment proceedings (the "Guaranteed Obligations").
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- Incorporation of Terms. The terms of the Agreements are incorporated in this Guaranty as if stated in full, including the covenants stated in ARTICLE 13 and the dispute resolutions provisions stated in ARTICLE 17 of the Franchise Agreement by which Guarantor agrees to be bound. The Guarantor has had an opportunity to read, and to receive advice by his or her counsel of, the terms of the Agreements and the Franchisor's Franchise Disclosure Document.
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- Guaranty Absolute and Irrevocable. The obligation of the Guarantor is absolute and unconditional irrespective of the validity or enforceability of any of the Agreements. This is an irrevocable and continuing guaranty. This Guaranty covers and secures any amount at any time owing on the Guaranteed Obligations and remains in full effect until all Guaranteed Obligations have been satisfied and all amounts due have been paid in full to the Franchisor or its affiliates. The Guarantor waives the benefit of any circumstance, defense or statute of limitations affecting
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, a Guarantor is indeed personally liable for breaches of the franchise agreement. The Guarantor's obligations are absolute and unconditional, irrespective of the validity or enforceability of the agreement itself. This means that even if there are issues with the underlying franchise agreement, the Guarantor remains responsible for ensuring the franchisee fulfills all obligations.
The Guaranty extends to every term of the Agreements, including all charges, fees, and expenses, such as attorneys' fees and costs, incurred in enforcing the terms through various legal proceedings like litigation, arbitration, bankruptcy, and post-judgment actions. This "Guaranteed Obligations" clause ensures that Stretch Zone can pursue the Guarantor for any financial or performance-related shortcomings of the franchisee.
Furthermore, the Guaranty is irrevocable and remains in full effect until all Guaranteed Obligations are satisfied and all amounts due are paid in full to Stretch Zone or its affiliates. The Guarantor also waives any defenses or statutes of limitations that might otherwise protect them from liability. This waiver includes any requirement for Stretch Zone to first pursue the franchisee or any collateral before seeking recourse from the Guarantor. This arrangement provides Stretch Zone with a direct and unencumbered path to recover any losses from the Guarantor, making the Guarantor's role a significant commitment.