What covenants are the undersigned personally bound by under the B Bops personal guaranty?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
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- In consideration of the development rights granted to Developer hereunder and in order to induce Company to grant such development rights to Developer, each of the undersigned hereby agrees, jointly, individually and severally, for themselves, their heirs, legal representatives and assigns as follows: (a) that they, and each of them, shall be personally bound by and agree to perform all of the terms, provisions and conditions of this Agreement; (b) that they, and each of them, do hereby personally and unconditionally guarantee full and prompt payment to Company of any indebtedness of Developer arising under or by virtue of this Agreement; (c) that they, and each of them, will not sell, assign or otherwise permit or cause a transfer of the development rights or any partnership or stock interest in Developer without complying with the requirements of Section 13 of the Agreement; (d) that they, and each of them, shall be personally bound by the nondisclosure and noncompete covenants of this Agreement; and (e) that they, and each of them, shall be personally liable for the breach of any provision of this Agreement, including both monetary obligations and any obligation to take or refrain from taking specific actions or activities.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the personal guaranty outlines several covenants that the undersigned are personally bound by. Specifically, those signing the guaranty agree to perform all terms, provisions, and conditions of the Multiple-Unit Development Agreement. They also guarantee the full and prompt payment of any indebtedness of the Developer arising from the agreement.
Furthermore, the personal guaranty stipulates that the undersigned will not sell, assign, or transfer development rights or any interest in the Developer without complying with Section 13 of the agreement. They are also bound by the nondisclosure and noncompete covenants included in the agreement. Additionally, the undersigned are personally liable for any breach of the agreement, which includes both monetary obligations and obligations to take or refrain from specific actions.
This means that if a franchisee signs a personal guarantee for a B Bops multiple-unit development agreement, they are taking on significant personal responsibility for the developer's obligations. This includes financial obligations, adherence to the development schedule, and compliance with non-compete and confidentiality clauses. The guarantor's personal assets are at risk if the developer fails to meet these obligations.
It is important to note that the guaranty is continuing and irrevocable, and the liability is primary, meaning B Bops does not have to pursue the Developer first before seeking recourse from the guarantors. The guarantors also waive certain notices, such as notice of acceptance or nonperformance. Prospective franchisees should carefully review the Multiple-Unit Development Agreement and the personal guaranty with legal counsel to fully understand the scope of their obligations and potential liabilities.