What is the definition of the 'Guarantor Monetary Threshold' for The Standardx franchise agreement?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
"Guarantor Monetary Threshold" means each of the following: (a) total assets less total liabilities (excluding Hotel assets and liabilities relating solely to the Hotel), each as calculated in accordance with U.S. generally accepted accounting principles, in the minimum amount of the Guarantor Net Worth Minimum set forth in Exhibit B-1 and (b) liquid assets (consisting of cash, cash equivalents and marketable securities) in the minimum amount of the Guarantor Liquidity Minimum set forth in Exhibit B-1.
Source: Item 18 — OTHER INCOME (LOSS), NET (FDD pages 187–399)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the Guarantor Monetary Threshold is defined as the minimum financial requirements that a guarantor must meet to guarantee the franchisee's obligations. This threshold has two components: the amount of total assets less total liabilities (excluding Hotel assets and liabilities relating solely to the Hotel), calculated according to U.S. generally accepted accounting principles, and the amount of liquid assets (consisting of cash, cash equivalents, and marketable securities). The specific minimum amounts for these components are detailed in Exhibit B-1 of the Franchise Agreement, referred to as the Guarantor Net Worth Minimum and the Guarantor Liquidity Minimum, respectively.
The Standardx requires the franchisee to ensure that at least one guarantor meets the Guarantor Monetary Threshold at the time of signing the Guaranty and throughout the term of the Franchise Agreement. The franchisee must also ensure that the guarantor cooperates with The Standardx in all auditing and reporting requirements related to this threshold. This ongoing requirement ensures that there is always a financially capable party backing the franchisee's obligations.
The Guarantor Monetary Threshold is subject to annual increases based on the Consumer Price Index (CPI). This means that the minimum required amounts for both net worth and liquid assets will increase each year, effective on the first day of the calendar month during which the Franchise Agreement's Effective Date falls. The CPI Increase is calculated using the Consumer Price Index for all Urban Consumers for All Items, published by the U.S. Department of Labor, Bureau of Labor Statistics. If the Base Index is no longer published, The Standardx may designate another reasonably comparable index for calculating changes in the cost of living or purchasing power for consumers.
Prospective franchisees should carefully review Exhibit B-1 of The Standardx's Franchise Agreement to understand the initial Guarantor Monetary Threshold amounts and how they will increase over time. They should also discuss with The Standardx the specific financial documentation required to demonstrate compliance with the threshold and the implications if a guarantor fails to meet the threshold at any point during the term of the agreement. This ensures that franchisees are fully aware of the financial obligations and reporting requirements associated with the guaranty.