Are the non-disclosure and non-compete covenants in the B Bops agreement personally binding on the undersigned?
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.
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- 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 Developer 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 Developer; (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 Developer; and (e) that they, and each of them, hereby waive notice of acceptance, demand, protest, nonperformance and of any other notices.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the non-disclosure and non-compete covenants within the Multiple-Unit Development Agreement are personally binding on the individuals who sign the Personal Guaranty. Specifically, those who sign the guaranty agree to be personally bound by the nondisclosure and noncompete covenants outlined in the agreement. This means that these individuals are legally responsible for upholding these covenants, even if their company or partnership fails to do so.
This personal obligation extends to various aspects of the agreement. The individuals guarantee the full and prompt payment of any debts the developer owes to B Bops. They also agree not to transfer development rights or ownership interests without complying with the agreement's requirements. Furthermore, they are personally liable for any breaches of the agreement, including financial obligations and requirements to take or avoid specific actions.
The personal guaranty is designed to be ongoing and cannot be revoked. The individuals are required to fulfill any payment or performance obligations if the developer defaults. This liability is primary, meaning B Bops does not need to first pursue remedies against the developer before seeking recourse from the guarantors. The individuals also waive any rights to notices related to acceptance, demands, protests, or nonperformance.
For a prospective B Bops franchisee, this means that if you are asked to sign a personal guarantee as part of a Multiple-Unit Development Agreement, you are taking on significant personal legal and financial responsibilities. It is crucial to fully understand the terms of the agreement and the implications of the personal guarantee before signing, as your personal assets could be at risk if the development company fails to meet its obligations.