Does the Guaranty and Assumption of Obligations for The Standardx cover Franchisee's payment of liquidated damages?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
As used herein, the term "Guaranteed Obligations" means (i) Franchisee's payment in full of all of Franchisee's monetary obligations including but not limited to Franchisee's payment of any liquidated damages that become due and payable pursuant to the Franchise Agreement as and when required pursuant to the Franchise Agreement, and (ii) Franchisee's performance of each and every provision in the Franchise Agreement (including any amendments or modifications of the Franchise Agreement), including, without limitation: (a) obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including, without limitation, the confidentiality and transfer requirements and the prohibitions with respect to Competing Brand Owners; and (b) the arbitration requirements and other enforcement provisions in ARTICLE XIV and ARTICLE XVIII of the Franchise Agreement.
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 Guaranty agreement explicitly covers the franchisee's obligation to pay liquidated damages. The guarantor is responsible for ensuring the franchisee's monetary obligations, including any liquidated damages, are paid when due according to the franchise agreement. This obligation of the guarantor is part of the 'Guaranteed Obligations'.
The Guaranty agreement specifies that the guarantor is liable for the franchisee's payment of all monetary obligations, including liquidated damages, as required by the franchise agreement. This means that if the franchisee fails to pay liquidated damages, The Standardx can seek payment from the guarantor. The guarantor's obligations also extend to the franchisee's performance of every provision within the franchise agreement.
This provision ensures that The Standardx has recourse to another party, the guarantor, if the franchisee fails to meet its financial responsibilities, specifically including the payment of liquidated damages. The guarantor's liability is primary, meaning The Standardx is not required to first pursue the franchisee before seeking payment or performance from the guarantor. This arrangement provides The Standardx with an additional layer of financial security, reducing the risk of losses from unpaid liquidated damages.