What is the effect of any renewal of the Best Brains Promissory Note, in whole or in part?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Each person liable on this Note in any capacity, whether as maker, endorser, surety, guarantor or otherwise, and any holder (collectively hereafter "Obligor"), waives the benefit of the homestead exemption and of all other exemptions available to him and also waives presentment, demand, protest, notice of dishonor and all other notices of every kind and nature to which he would otherwise be entitled under the applicable law. Each Obligor agrees that Holder may take any one or more of the following actions, on one or more occasions, whether before or after the maturity of this Note, without any notice to such Obligor, without any further consent to such actions, and without releasing or discharging such Obligor from liability on the Note: (a) any extension or extensions of the time of payment of any principal, interest or other amount due and payable under this Note; (b) any renewal of this Note, in whole or in part; (c) any full or partial release or discharge from liability under this Note of any other Obligor; (d) any waiver of any default under this Note or other agreement between the Lender and any Obligor relating to the indebtedness evidenced by this Note; or (e) any agreement with the Maker changing the rate of interest or any other term or condition of this Note.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, the renewal of the Promissory Note, whether in whole or in part, does not release or discharge any person liable on the note from their obligations. The document specifies that each person liable on the note, referred to as an "Obligor," which includes makers, endorsers, sureties, and guarantors, remains responsible for the debt even if the note is renewed. This means that if Best Brains renews the note, all parties who originally agreed to be responsible for the debt continue to be liable.
This provision protects Best Brains by ensuring that the debt remains secured even if the terms of the note are adjusted through renewal. It also simplifies the process for Best Brains to manage the debt, as they do not need to obtain consent from each Obligor for the renewal. The Obligor has waived their right to notice regarding the renewal.
For a prospective Best Brains franchisee, this clause highlights the importance of understanding the full extent of their financial obligations when signing the Promissory Note. If the note is renewed, the franchisee's liability continues without requiring further consent or notification. This could have significant financial implications, especially if the franchisee was expecting their obligations to be reduced or discharged over time.