Does the Bombs Away Guaranty require Bombs Away Franchising to provide notice of demand for payment of any indebtedness to the Guarantor?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantor waives (a) acceptance and notice of acceptance by Bombs Away Franchising of this Guaranty; (b) notice of demand for payment of any indebtedness or nonperformance of any obligations of Franchisee; (c) protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed; (d) any right Guarantor may have to require that an action be brought against Franchisee or any other person or entity as a condition of liability hereunder; (e) all rights to payments and claims for reimbursement or subrogation which any of the undersigned may have against Franchisee arising as a result of the execution of and performance under this Guaranty by the undersigned; (f) any law which requires that Bombs Away Franchising make demand upon, assert claims against or collect from Franchisee or any other person or entity (including any other guarantor), foreclose any security interest, sell collateral, exhaust any remedies or take any other action against Franchisee or any other person or entity (including any other guarantor) prior to making any demand upon, collecting from or taking any action against the undersigned with respect to this Guaranty; and (g) any and all other notices and legal or equitable defenses to which Guarantor may be entitled.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the Guarantor waives the right to receive notice of demand for payment of any indebtedness or nonperformance of any obligations of the Franchisee. This means that Bombs Away Franchising is not required to provide the Guarantor with a notice of demand for payment before seeking payment or performance under the Guaranty.
This waiver is significant because it places the onus on the Guarantor to stay informed about the Franchisee's financial obligations and performance under the Franchise Agreement. The Guarantor is essentially agreeing to be liable for the Franchisee's debts and obligations without necessarily receiving a formal notice of default or demand for payment from Bombs Away.
This type of waiver is relatively common in franchise agreements, as it streamlines the process for the franchisor to seek recourse in case of franchisee default. However, it increases the risk for the Guarantor, who may be held liable without prior warning. Therefore, anyone considering acting as a Guarantor for a Bombs Away franchise should carefully consider the financial risks and ensure they have a clear understanding of the Franchisee's obligations and financial situation.