Under the Benjamin Franklin Plumbing guarantee, what constitutes a 'Default'?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of the willingness of Benjamin Franklin Franchising SPE LLC ("Holder") to permit ("Maker") to the Franchise Fee owed to Holder in connection with a BENJAMIN FRANKLIN PLUMBING Franchise Agreement and pursuant to the foregoing Promissory Note ("Note"), the undersigned ("Guarantors"), hereby personally and unconditionally: (1) guarantee to Holder and its successors and assigns that Maker shall punctually pay and perform each and every undertaking set forth in the Note; and (2) agree personally to be liable for Maker's Default under the Note.
Each Guarantor waives: (a) acceptance and notice of acceptance by Holder of the foregoing undertakings; (b) notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed; (c) protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed; (d) any right he or she may have to require that an action be brought against Maker or any other person as a condition of liability; (e) all rights to payments and claims for reimbursement or subrogation which any Guarantor may have against Maker arising as a result of the execution of and performance under this Guarantee by any Guarantor; (f) any law or statute which requires that Holder make demand upon, assert claims against or collect from Maker or any others, foreclose any security interest, sell collateral, exhaust any remedies or take any other action against Maker or any others prior to making any demand upon, collecting from or taking any action against Guarantors with respect to this Guarantee; (g) any and all other notices and legal or equitable defenses to which he or she may be entitled; and (h) any and all right to have any legal action under this Guarantee decided by a jury.
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Benjamin Franklin Plumbing discusses a guarantee related to a Promissory Note, but it does not define what constitutes a 'Default' under that guarantee. The guarantee is provided by the Guarantors to the Holder (Benjamin Franklin Franchising SPE LLC) to ensure that the Maker punctually pays and performs every undertaking in the Note. The Guarantors agree to be personally liable for the Maker's Default under the Note.
However, the FDD excerpts provided do not specify the conditions that would trigger a 'Default'. The excerpts focus on the Guarantor's obligations and waivers, such as waiving notice of acceptance, demand for payment, or default. They also waive rights to require action against the Maker before pursuing the Guarantors. These waivers strengthen the Holder's position in case of non-payment but do not clarify what actions or omissions by the Maker would be considered a 'Default'.
A prospective Benjamin Franklin Plumbing franchisee should carefully review the Promissory Note and related agreements to understand exactly what actions or failures would constitute a 'Default,' as this would trigger the guarantee and make the Guarantors liable. It is essential to understand the specific payment terms, performance obligations, and any cure periods that might apply before a 'Default' is declared. Consulting with a legal and financial advisor is recommended to fully understand the implications of the guarantee and the definition of 'Default' within the context of the Promissory Note and Franchise Agreement.