Does assignment of the Guaranty by Beehive Homes affect the Guarantor's liability?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
Assignee must pay all fees and perform all obligations under the Franchise Agreement.
Assignor agrees to remain personally bound by, and personally liable for the breach of, each and every provision of the Franchise Agreement, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, and is not released from any obligations to Bee Hive Homes by this Assignment. After the date of this Assignment, all references to Franchisee in the Franchise Agreement shall refer to both Assignor and Assignee both jointly and severally.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, if an Assignor transfers their franchise to an Assignee, the Assignor remains personally liable for any breaches of the Franchise Agreement. This includes both monetary obligations and the responsibility to take or avoid specific actions as outlined in the agreement. Therefore, the Assignor is not released from their obligations to Beehive Homes due to the assignment. After the assignment date, all references to 'Franchisee' in the Franchise Agreement will jointly and severally refer to both the Assignor and the Assignee. This indicates that both parties share responsibility for fulfilling the terms of the agreement.
This condition protects Beehive Homes by ensuring that the original franchisee remains accountable even after transferring the franchise to another party. It means that if the new franchisee (Assignee) fails to meet their obligations, Beehive Homes can still hold the original franchisee (Assignor) responsible. This clause is particularly important for Beehive Homes as it mitigates the risk associated with transferring franchise ownership.
For a prospective Beehive Homes franchisee considering assigning their franchise, this clause means they will continue to be liable for the franchise's performance even after the transfer. Therefore, it is crucial to carefully vet the potential Assignee and ensure they are capable of fulfilling the franchise obligations. The Assignor should also seek legal advice to fully understand the implications of this continued liability and potentially negotiate terms that could mitigate their risk after the assignment.