Under the Bambu guaranty, is Bambu required to pursue remedies against the franchisee before seeking payment from the guarantor?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the undersigned consents and agrees that:
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- His or her direct and immediate liability under this guaranty shall be joint and several;
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- He or she shall render any payment or performance required under the Agreement upon demand if Franchisee fails or refuses punctually to do so;
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- Such liability shall not be contingent or conditioned upon pursuit by Bambu of any remedies against Franchisee or any other person; and
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- Such liability shall not be diminished, relieved or otherwise affected by any extension of time, credit or other indulgence which Bambu may from time to time grant to Franchisee or to any other person, including without limitation the acceptance of any partial payment or performance, or the compromise or release of any claims, none of which shall in any way modify or amend this guaranty, which shall be continuing and irrevocable during the term of the Agreement, including successor franchise terms.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the guarantor is directly and immediately liable under the guaranty, jointly and severally. The guarantor must make any payment or performance required under the Franchise Agreement upon demand if the franchisee fails or refuses to do so punctually. Bambu is not required to pursue any remedies against the franchisee or any other person before demanding payment or performance from the guarantor. The guarantor's liability will not be diminished or affected by any extensions of time, credit, or other allowances Bambu grants to the franchisee, including accepting partial payments or releasing claims.
This means that if a Bambu franchisee defaults on their obligations, Bambu can immediately seek payment or performance from the guarantor without first having to take action against the franchisee. This provides Bambu with a direct and efficient means of recovering any amounts owed or ensuring compliance with the Franchise Agreement.
For a prospective guarantor, this represents a significant risk. They are essentially guaranteeing the franchisee's performance and financial obligations, and they can be held liable for any defaults without Bambu first pursuing other avenues of recovery. It is crucial for potential guarantors to fully understand the franchisee's business and financial situation before agreeing to the guaranty. They should also carefully review the Franchise Agreement and the guaranty document to understand the full extent of their obligations and potential liabilities.