Under the Bhc Guarantee, does the cessation of liability for the Franchisee automatically relieve the guarantors from liability?

According to Bhc's 2025 Franchise Disclosure Document, the cessation of liability for the franchisee does not automatically relieve the guarantors from liability under the Franchise Agreement or any other agreements between Bhc and the franchisee. The guarantors remain liable unless the breach or default has been remedied or the money owed has been paid. This means that even if the franchisee is released from their obligations, the individuals or entities that have guaranteed the franchisee's performance will still be responsible for fulfilling those obligations, unless the specific issue leading to the liability has been resolved.

This provision protects Bhc by ensuring that there are multiple parties responsible for the franchisee's obligations. If the franchisee is unable to meet their financial or contractual commitments, Bhc can pursue the guarantors to recover any losses. This reduces the risk to Bhc and provides an additional layer of security for the franchise agreement.

For a prospective Bhc franchisee, this means that anyone acting as a guarantor (often family members or business partners) needs to understand the full extent of their potential liability. They should carefully review the guarantee agreement and understand the circumstances under which they could be held responsible for the franchisee's debts or other obligations. It is important to note that the guarantee is continuing, absolute, unconditional, and irrevocable, meaning it remains in effect regardless of any waivers, extensions, or other indulgences granted to the franchisee.