Under the Guaranty and Assumption of Obligations for Big Apple Bagels, what agreement is the Guaranty tied to?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
In consideration of, and as an inducement to, the execution of that certain BAB SYSTEMS, INC. Area Development Agreement of even date herewith (the "Agreement") by BAB Systems, Inc. (the "Franchisor"), each of the undersigned hereby personally and unconditionally (a) guarantees to Franchisor, and its successors and assigns, for the term of the Agreement and thereafter as provided in the Agreement, that ("Developer") shall punctually pay and perform each and every undertaking, agreement and covenant set forth in the Agreement; and (b) agrees to be personally bound by, and personally liable for the breach of, each and every provision in the Agreement, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including without limitation the provisions of Section 7 and Paragraph C of Section 11.
Each of the undersigned waives: (1) acceptance and notice of acceptance by Franchisor of the foregoing undertakings; (2) notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed; (3) protest and notice of default to any party with respect to the indebtedness or nonperformance of obligations hereby guaranteed; (4) any right he may have to require that an action be brought against Developer or any other person as a condition of liability; (5) all right to payment and claims for reimbursement or subrogation which any of the undersigned may have against Developer arising as a result of the undersi
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, the Guaranty and Assumption of Obligations is tied to the Area Development Agreement. Specifically, the guarantor agrees to ensure the developer (the franchisee) punctually pays and performs all obligations outlined in the Area Development Agreement. This guarantee extends for the term of the agreement and beyond, as specified within the agreement itself.
In practical terms, this means that if a Big Apple Bagels area developer fails to meet their financial or operational obligations under the Area Development Agreement, the guarantor is personally liable. This liability includes monetary obligations, as well as the responsibility to take or refrain from specific actions as detailed in the agreement. The guarantor is essentially providing a personal assurance that the developer will fulfill all requirements of the Area Development Agreement.
The guarantor also waives several rights, including the right to require the franchisor to take action against the developer first, and any rights to reimbursement or subrogation against the developer. This underscores the comprehensive nature of the guarantee, placing the onus on the guarantor to ensure the developer's compliance with the Area Development Agreement. This is a common practice in franchising, where franchisors seek additional security to ensure franchisees meet their development obligations.