Does a release or discharge of the Franchisee under the Franchise Agreement automatically release or discharge the Beehive Homes Guarantors under the Guaranty?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Waivers of Certain Rights and Defenses. Each Guarantor waives: (a) any right or claim that Guarantor may have to require that an action be brought against Franchisee or any other person as a condition of Guarantor's liability under this Guaranty; (b) all rights to payments and claims for reimbursement or subrogation which any of the undersigned may have against Franchisee arising as a result of Guarantor's execution of and performance under this Guaranty; (c) any law or statute which requires that Franchisor make demand on, assert claims against or collect from Franchisee or any others, foreclose any security interest, sell collateral, exhaust any remedies or take any other action against Franchisee or any others before making any demand on, collecting from or taking any action against Guarantor under or with respect to this Guaranty; (d) any right or claim Guarantor may have that a release or discharge of Franchisee under the Franchise Agreement is a release or discharge of Guarantors under the Franchise Agreement or this Guaranty; and (e) any and all other notices and legal or equitable defenses to which Guarantor may be entitled.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, a release or discharge of the franchisee under the Franchise Agreement does not automatically release or discharge the guarantors under the Guaranty.
The Guarantor, by signing the Guaranty, waives any right or claim that a release or discharge of the franchisee under the Franchise Agreement would act as a release or discharge of the Guarantors under the Franchise Agreement or the Guaranty. This means that even if the franchisee is released from their obligations, the Guarantor remains responsible for fulfilling the obligations outlined in the Guaranty.
This waiver protects Beehive Homes by ensuring that the Guarantor remains liable for the franchisee's obligations, even if the franchisee is no longer bound by the Franchise Agreement. This could occur in various scenarios, such as a transfer of the franchise or a settlement agreement. Prospective franchisees should carefully consider the implications of the Guaranty and the waiver of these rights, as they will remain liable even if the franchisee is released.