This is a document guarantee of franchise agreement for use during a franchising transaction.
If a franchisee named in the franchise agreement is a corporate entity, the franchisor should ensure that all its directors and shareholders sign a guarantee. By signing a guarantee, each of the guarantors becomes personally liable for the corporate franchisee’s debts and obligations under the franchise agreement.
The guarantee can be used by the franchisor to enforce any unpaid debt or obligations of the corporate franchisee. If there is more than one guarantor, such as the company’s various directors, their liability is joint and several. This means that each guarantor can be held equally liable for the debt, as well as it being enforced against each of the individual guarantors separately from the others.
Signing a guarantee is a serious undertaking and practitioners should ensure that each guarantor understands the consequences of doing so.
Other precedents for use during this stage of the franchising transaction include "Licence agreement" and "Non-competition agreement".
This document has been authored for Lexis Nexis by Stephen Giles, Norton Rose Fulbright Australia with introductory note by Jane Garber-Rosenzweig, Gable Lawyers.
This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.