If Bombs Away Franchising compromises claims, does this affect the Guarantor's liability?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
Guarantor agrees that Guarantor's liability hereunder shall not be diminished, relieved or otherwise affected by (a) any amendment of the Franchise Agreement, (b) any extension of time, credit or other indulgence which Bombs Away Franchising may from timeto-time grant to Franchisee or to any other person or entity, or (c) the acceptance of any partial payment or performance or the compromise or release of any claims.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the Guarantor's liability remains unaffected even if Bombs Away Franchising compromises claims. The Guaranty and Non-Compete Agreement specifies that the Guarantor's obligations are not diminished or relieved by the compromise or release of any claims.
This provision protects Bombs Away by ensuring that the Guarantor remains fully liable for the Franchisee's obligations, regardless of any concessions or settlements Bombs Away might make with the Franchisee. This is a standard practice in franchising, as it provides the franchisor with added security and recourse in case of franchisee default.
For a prospective Bombs Away franchisee, this means that if a third party guarantees the franchisee's obligations, that guarantor cannot escape liability simply because Bombs Away reached a settlement or compromise with the franchisee. The guarantor's financial responsibility remains intact, providing Bombs Away with a continued avenue for recovering any outstanding debts or unfulfilled obligations. Franchisees should ensure their guarantors fully understand this aspect of the agreement.