Is the Guaranty for Stretch Zone absolute and unconditional, irrespective of the validity or enforceability of any of the Agreements?
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, the Guaranty is indeed absolute and unconditional. Specifically, the obligation of the Guarantor is not affected by the validity or enforceability of any of the Agreements. This means that even if there are issues with the underlying agreements, the Guarantor's responsibility remains intact.
The Guaranty is also described as irrevocable and continuing, securing any amount owed on the Guaranteed Obligations until all debts are fully paid to Stretch Zone or its affiliates. The Guarantor waives any defenses or statutes of limitations that could otherwise discharge them or hinder the enforcement of the Guaranty.
Furthermore, Stretch Zone is not obligated to pursue the Developer's assets or any collateral before seeking fulfillment from the Guarantor. The franchisor also has no duty to keep the Guarantor informed about the financial status of the Franchisee. This arrangement strongly favors Stretch Zone, placing significant responsibility and risk on the Guarantor.