Under the Franchise Agreement, who guarantees The Standardx's obligations to franchisees?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, simultaneously herewith, Franchisee is entering into a Brand Hotel Franchise Agreement (as amended, modified or amended and restated from time to time, the "Franchise Agreement") with Hyatt with respect to the Hotel;
WHEREAS, Guarantor is either an owner (whether direct or indirect) of Franchisee or otherwise has a direct or indirect relationship with Franchisee or its affiliates, Guarantor will benefit significantly from Hyatt's entering into the Franchise Agreement with Franchisee, and Hyatt will not enter into the Franchise Agreement unless each of the undersigned agrees to sign and comply with the terms of this Guaranty;
WHEREAS, as a condition to entering into the Franchise Agreement, Hyatt has required that Guarantor guarantee the payment and performance of the Guaranteed Obligations (as defined herein), subject to the terms of this Guaranty.
NOW, THEREFORE, as a material inducement to Hyatt entering into the Franchise Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby does irrevocably and unconditionally warrant and represent unto and covenant as follows:
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- Recitals; Defined Terms. The recitals above are a part of this Guaranty, form a basis for this Guaranty, and shall be considered prima facie evidence of the facts and documents referred to therein. Defined terms used but not defined herein shall have the meanings ascribed to them in the Franchise Agreement.
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- Guaranty. Guarantor hereby irrevocably and unconditionally personally guarantees to Hyatt and its successors and assigns Franchisee's punctual payment and performance of, and agrees to be personally bound by and personally liable for the breach of, each and every Guaranteed Obligation. Guarantor hereby irrevocably and unconditionally covenants and agrees that it is liable for the Guaranteed Obligations as a primary obligor.
- H-1 3. Guaranteed Obligations. As used herein, the term "Guaranteed Obligations" means (i) Franchisee's payment in full of all of Franchisee's monetary obligations including but
Source: Item 21 — Financial Statements (FDD page 85)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, a Guarantor, who has a relationship with the franchisee or its affiliates, guarantees the franchisee's obligations to Hyatt. This guarantee is a condition for Hyatt entering into the Franchise Agreement. The Guarantor benefits from Hyatt's agreement with the franchisee and agrees to ensure the franchisee's payment and performance of obligations.
The Guarantor irrevocably and unconditionally guarantees the franchisee's punctual payment and performance to Hyatt and its successors. The Guarantor is personally bound by and liable for any breach of the Guaranteed Obligations, acting as a primary obligor. The term "Guaranteed Obligations" encompasses the franchisee's full payment of all monetary obligations.
This arrangement means that if the franchisee fails to meet its financial or performance obligations under the Franchise Agreement, Hyatt can seek recourse directly from the Guarantor. For a prospective franchisee, this highlights the importance of having a financially stable and reliable Guarantor who understands the full extent of the obligations they are undertaking. The obligations of the Guarantor are not released or diminished even if the Franchise Agreement is altered or modified without notice to the Guarantor.