Under the Bft Franchise Agreement, what is the role of the Guarantor in relation to the Franchisee's obligations?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
in) provided by financing activities | (8,000 ) | 8,000 | | Increase in cash and cash equivalents | 593 | 8,000 | | Cash and cash equivalents, beginning of period | 8,000 | — | | Cash and cash equivalents, end of period | 8,593 | $ 8,000 |
EXHIBIT 3 TO FRANCHISE AGREEMENT
GUARANTEE, INDEMNIFICATION AND ACKNOWLEDGEMENT
| to execute the Franchise Agreement (the "Franchise Agreement"), dated | , 20 (the "Effective |
|---|---|
| Date"), by and between Franchisor and or his assignee, if a partnership, corporation | |
| or limited liability company is later formed (the "Franchisee"), the undersigned (each a "Guarantor"), jointly and | |
| severally, hereby unconditionally guarantee to Franchisor and its successors and assigns the full and timely | |
| performance by Franchisee of each obligation undertaken by Franchisee under the terms of the Franchise | |
| Agreement. |
Upon demand by Franchisor, Guarantor will immediately make each payment required of Franchisee under the Franchise Agreement. Guarantor hereby waives any right to require Franchisor to: (a) proceed against Franchisee for any payment required under the Franchise Agreement; (b) proceed against or exhaust any security from Franchisee; or (c) pursue or exhaust any remedy, including any legal or equitable relief, against Franchisee. Without affecting the obligations of Guarantor under this Guarantee, Indemnification and Acknowledgment (the "Guarantee"), Franchisor may, without notice to Guarantor, extend, modify, or release any indebtedness or obligation of Franchisee, or settle, adjust or compromise any claims against Franchisee.
Guarantor waives notice of amendment of the Franchise Agreement and notice of demand for payment by Franchisee and agrees to be bound by any and all such amendments and changes to the Franchise Agreement.
Guarantor hereby agrees to defend, indemnify and hold Franchisor harmless against any and all losses, damages, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees, reasonable costs of investigations, court costs, and arbitration fees and expenses) resulting from, consisting of, or arising out of or in connection with any failure by Franchisee to perform any obligation of Franchisee under the Franchise Agreement, any amendment, or any other agreement executed by Franchisee referred to therein.
Guarantor hereby acknowledges and agrees to be individually bound by all obligations and covenants of Franchisee contained in the Franchise Agreement, including those related to non-competition and confidentiality.
If Guarantor is a business entity, retirement or investment account, or trust acknowledges and it agrees that if Franchisee (or any of its affiliates) is delinquent in payment of any amounts guaranteed hereunder, that no dividends or distributions may be made by such Guarantor (or on such Guarantor's account) to its owners, accountholders or beneficiaries or otherwise, for so long as such delinquency exists, subject to applicable law.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the Guarantor plays a significant role in ensuring the Franchisee's obligations are met under the Franchise Agreement. Upon demand from Bft, the Guarantor is obligated to immediately make any payment required of the Franchisee. The Guarantor waives any right to require Bft to first pursue the Franchisee for payment or exhaust any security from the Franchisee before seeking payment from the Guarantor. This means Bft can directly seek payment from the Guarantor without taking any prior action against the Franchisee.
Furthermore, Bft can extend, modify, or release any debt or obligation of the Franchisee or settle claims against the Franchisee without notifying the Guarantor, and this will not affect the Guarantor's obligations under the guarantee. The Guarantor also waives notice of any amendments to the Franchise Agreement or notice of demand for payment by the Franchisee, agreeing to be bound by any changes to the Franchise Agreement. This indicates that the Guarantor's obligations are independent of any modifications made to the agreement between Bft and the Franchisee.
The Guarantor also agrees to defend, indemnify, and hold Bft harmless from any losses, damages, liabilities, costs, and expenses, including attorney's fees, resulting from the Franchisee's failure to perform any obligation under the Franchise Agreement. The Guarantor acknowledges being individually bound by all obligations and covenants of the Franchisee, including those related to non-competition and confidentiality. If the Guarantor is a business entity, retirement or investment account, or trust, it agrees that no dividends or distributions may be made to its owners, accountholders, or beneficiaries if the Franchisee is delinquent in payment of any guaranteed amounts, subject to applicable law. This comprehensive guarantee ensures that Bft has recourse to the Guarantor for any failures of the Franchisee to meet their obligations, providing Bft with a strong layer of financial security.
The guarantee remains in effect even after the Franchise Agreement expires or terminates, particularly for obligations and liabilities arising from events that occurred before the expiration or termination date or that survive the expiration or termination of the Franchise Agreement. The guarantee is binding on the Guarantor and their estate, executors, administrators, heirs, beneficiaries, and successors in interest. The validity of the guarantee and the Guarantor's obligations are not affected by any action Bft takes or is forced to take against the Franchisee, or by any waiver or failure to enforce rights or remedies against the Franchisee. Any disputes between the Guarantors and Bft will be governed by the dispute resolution provisions in the Franchise Agreement, including governing law, mediation, mandatory binding arbitration, consent to jurisdiction, and attorneys' fees and costs. The Guarantors are responsible for reimbursing Bft for all costs and expenses incurred in enforcing the terms of the guarantee.