Is the liability of the guarantors under the B Bops agreement primary or secondary?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the undersigned further agree as follows: (a) that this Guaranty shall be continuing and irrevocable; (b) that they, and each of them, shall render any payment or performance required under this Agreement upon demand if Franchisee fails or refuses promptly to do so; (c) such liability shall be primary and shall not be contingent upon Company pursuing or exhausting any remedies against Franchisee; (d) such liability shall not be waived, diminished or otherwise affected by any extension of time, credit or other indulgence which Company may from time to time grant to Franchisee; and (e) that they, and each of them, hereby waive notice of acceptance, demand, protest, nonperformance and of any other notices.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the liability of the guarantors is primary. This means that if the franchisee fails to make a payment or fulfill a requirement under the franchise agreement, the guarantor is immediately responsible for the obligation. B Bops is not required to first pursue or exhaust remedies against the franchisee before demanding payment or performance from the guarantor.
This primary liability is a significant commitment for the guarantor. It means the guarantor's assets are directly at risk if the franchisee defaults. The guarantor cannot require B Bops to seek payment from the franchisee first. This arrangement offers B Bops a direct avenue for recourse in case of franchisee default, enhancing the security of the franchise agreement.
Furthermore, the guarantor's liability is not waived or diminished by any extensions of time or credit that B Bops might grant to the franchisee. The guarantors also waive any notice of acceptance, demand, protest, nonperformance, or any other notices. This underscores the comprehensive and unconditional nature of the guaranty, placing a significant responsibility on the personal guarantors to ensure the franchisee's obligations are met.
Prospective franchisees should carefully consider the implications of this primary liability and ensure that any personal guarantors fully understand the extent of their obligations and potential financial exposure under the B Bops franchise agreement.