Does the cessation of liability of the Master Franchisee automatically relieve the guarantors from liability under the Bhc Guarantee?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Notice to or demand upon Master Franchisee or any of the undersigned will be deemed notice to or demand upon Master Franchisee and all the undersigned, and no notice or demand need be made to or upon any of the undersigned. The cessation of or release from liability of Master Franchisee or any of the undersigned will not relieve any other guarantors from liability hereunder, under the Master Franchise Agreement, or under any other agreement(s) between Franchisor and Master Franchisee, except to the extent that the breach or default has been remedied or moneys owed have been paid.
Any waiver, extension of time or other indulgence granted by Franchisor or its agents, successors, or assigns, related to the Master Franchise Agreement or any other agreement(s) by and between Master Franchisee and Franchisor, will not modify or amend this Guarantee, which will be continuing, absolute, unconditional, and irrevocable.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the cessation of liability for the Master Franchisee does not automatically relieve the guarantors from their obligations under the Bhc Guarantee. The guarantee remains in effect even if the Master Franchisee is released from liability, except in specific circumstances. This protection extends to the Franchise Agreement or any other agreements between Bhc and the Master Franchisee.
The guarantors remain liable unless the breach or default that led to the Master Franchisee's release has been fully resolved. This resolution typically involves either remedying the breach or paying all outstanding monies owed to Bhc. This provision ensures that Bhc retains recourse against the guarantors for any unresolved issues, even if the Master Franchisee's direct liability has ceased.
Furthermore, any waivers, extensions of time, or other concessions granted by Bhc do not impact the guarantee. The guarantee is described as continuing, absolute, unconditional, and irrevocable, reinforcing the commitment of the guarantors. This means that the guarantors cannot claim that their obligations were diminished or nullified due to any leniency shown to the Master Franchisee by Bhc. This clause is designed to protect Bhc's interests and ensure the stability of the agreement, regardless of any modifications or waivers granted to the Master Franchisee.
In cases where multiple individuals act as guarantors, their liability is joint and several, meaning each guarantor is fully responsible for the entire obligation. Bhc can pursue any or all of the guarantors to fulfill the obligations under the Master Franchise Agreement. This provision strengthens Bhc's position by providing multiple avenues for recourse in case of default, ensuring that the obligations are met regardless of the Master Franchisee's or any individual guarantor's circumstances.