What happens if the Guarantor of The Standardx franchise is insolvent or bankrupt?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
(iii) the insolvency, bankruptcy, arrangement, adjustment, composition, liquidation, disability, dissolution or lack of power of Franchisee, Guarantor or any other party at any time liable for the payment or performance of all or part of the Guaranteed Obligations; or any dissolution of Franchisee or Guarantor, or any sale, lease or transfer of any or all of the assets of Franchisee or Guarantor, or any changes in the direct or indirect owners of Franchisee or Guarantor; or any reorganization of Franchisee or Guarantor.
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- Nature of Guaranty.
Guarantor consents and agrees that: (1) the representations, warranties, agreements, liabilities, and obligations of Guarantor set forth in this Guaranty shall apply to each of the undersigned parties in its individual capacity; (2) notwithstanding the foregoing, each of the undersigned's direct and immediate liability under this Guaranty will be
joint and several, both with Franchisee and among the other parties (if any) comprising Guarantor; (3) Guarantor will render any payment or performance required under the Franchise Agreement upon demand if Franchisee fails or refuses punctually to do so; (4) this liability will not be contingent or conditioned upon Hyatt's pursuit of any remedies against Franchisee or any other person or entity; (5) this liability will not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence that Hyatt may from time to time grant to Franchisee or any other person or entity, including, without limitation, the acceptance of any partial payment or performance or the compromise or release of any claims (including the release of other guarantors), none of which will in any way modify or amend this Guaranty, which will be continuing and irrevocable during and after the term of the Franchise Agreement (including extensions) for so long as any performance is or might be owed under the Franchise Agreement by Franchisee or any of its guarantors and for so long as Hyatt has any cause of action against Franchisee or any of its guarantors; and (6) this Guaranty will continue in full force and effect for (and as to) any extension or modification of the Franchise Agreement and despite the transfer of any direct or indirect interest in the Franchise Agreement or Franchisee, and Guarantor waives notice of any and all renewals, extensions, modifications, amendments, or transfers.
6. Waivers.
(a) Guarantor hereby waives: (i) all rights to payments and claims for reimbursement or subrogation that Guarantor may have against Franchisee arising as a result of the undersigned's execution of and performance under this Guaranty, for the express purpose that none of the undersigned shall be deemed a "creditor" of Franchisee under any applicable bankruptcy law with respect to Franchisee's obligations to Hyatt; (ii) all rights to require Hyatt to proceed against Franchisee for any payment required under the Franchise Agreement, proceed against or exhaust any security from Franchisee, take any action to assist any of the undersigned in seeking reimbursement or subrogation in connection with this Guaranty or pursue, enforce or exhaust any remedy, including any legal or equitable relief, against Franchisee; (iii) any benefit of, any right to participate in, any security now or hereafter held by Hyatt; and (iv) acceptance and notice of acceptance by Hyatt of Guarantor's undertakings under this Guaranty, all presentments, demands and notices of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed, protest, notices of dishonor, notices of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed (except as otherwise expressly provided herein or in the Franchise Agreement), and any other notices and legal or equitable defenses to which Guarantor may be entitled.
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 insolvency or bankruptcy of the Guarantor does not diminish their obligations. Specifically, the Guarantor's obligations remain even if they, the franchisee, or any other liable party becomes insolvent or bankrupt. This is part of a broader set of waivers and consents the Guarantor provides to ensure their guarantee remains in effect under various circumstances.
The Guarantor consents and agrees that their liabilities and obligations under the Guaranty apply individually. The Guarantor's liability is joint and several with the franchisee and any other parties comprising the Guarantor. This means The Standardx can seek full payment or performance from any one of the guarantors without first pursuing the franchisee. The Guarantor's obligations are not contingent on The Standardx pursuing remedies against the franchisee or any other person or entity.
The Guarantor's liability will not be affected by any extensions of time, credit, or other allowances The Standardx might grant to the franchisee. This includes accepting partial payments or compromising claims. The Guaranty remains continuing and irrevocable during and after the term of the Franchise Agreement, including extensions, as long as any performance is owed under the Franchise Agreement or The Standardx has any cause of action against the franchisee or its guarantors. The Guaranty remains in effect for any extension or modification of the Franchise Agreement, even if there is a transfer of interest in the Franchise Agreement or franchisee, and the Guarantor waives notice of any renewals, extensions, modifications, amendments, or transfers.
Furthermore, the Guarantor waives several rights that might otherwise protect them. This includes waiving rights to payments and claims for reimbursement or subrogation against the franchisee, ensuring they are not considered a creditor of the franchisee under bankruptcy law. The Guarantor also waives rights to require The Standardx to proceed against the franchisee or exhaust any security from the franchisee before seeking recourse from the Guarantor. They waive any benefit of security held by The Standardx and waive notices of acceptance, demand for payment, dishonor, and default, as well as other legal or equitable defenses.