Does the Guarantor for The Standardx franchise waive the right to cause a marshaling of assets?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) In addition, Guarantor waives any defense arising by reason of any of the following: (i) any disability or any counterclaim or right of set-off or other defense of Franchisee, (ii) any lack of authority of Franchisee with respect to the Franchise Agreement, (iii) the cessation from any cause whatsoever of the liability of Franchisee, (iv) any circumstance whereby the Franchise Agreement shall be void or voidable as against Franchisee or any of Franchisee's creditors, including a trustee in bankruptcy of Franchisee, by reason of any fact or circumstance, (v) any event or circumstance that might otherwise constitute a legal or equitable discharge of the undersigned's obligations hereunder, except that the undersigned do not waive any defense arising from the due performance by Franchisee of the terms and conditions of the Franchise Agreement, (vi) any right or claim of right to cause a marshaling of the assets of Franchisee or any other guarantor, and (vii) any act or omission of Franchisee.
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 does waive the right to cause a marshaling of assets of the franchisee or any other guarantor. This waiver is part of a broader set of waivers intended to protect Hyatt's interests and ensure the enforceability of the guaranty.
In practical terms, this means that the Guarantor cannot demand that the assets of the franchisee or other guarantors be arranged or applied in a specific order to satisfy the debt. The franchisor, Hyatt, has the flexibility to pursue assets in the order it deems most efficient. This waiver is significant because it limits the Guarantor's ability to influence how the debt is recovered and potentially increases their exposure.
This type of waiver is relatively common in franchising, as franchisors seek to streamline the process of recovering debts and minimizing potential legal challenges. Prospective franchisees and their guarantors should carefully consider the implications of such waivers, as they can significantly alter the guarantor's rights and obligations. It is advisable to seek legal counsel to fully understand the scope and impact of these waivers before signing the Guaranty.