What is the purpose of the Guaranty of Franchisee's Obligations for Bor Restoration?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
| This Guaranty of Franchisee's Obligations (Guaranty) is entered into as of the date that it is signed by all Parties (Effective Date) of this Guaranty, between BOR Franchising, LLC (Franchisor), (Franchisee) and , and (jointly and severally known as "Guarantor(s)"). Franchisor, Franchisee, and Guarantors may be referred to as a "Party" or as the "Parties." Any capitalized term not defined here will have the meaning given to it in the Franchise Agreement. |
|---|
| RECITALS |
| Franchisee signed a franchise agreement with Franchisor on the day of, 20 |
| (Franchise Agreement). |
| As an inducement to the Franchisor for granting the |
| franchise rights, the |
| Guarantor(s) agreed to fully guaranty the payment and performance of Franchisee under the Franchise |
| Agreement; |
| NOW, THEREFORE, for and in consideration of the mutual covenants found herein and for other |
| good and valuable consideration, which consideration is deemed to be adequate by all Parties, each of the |
| undersigned personally and unconditionally agrees |
| to the following: |
| COVENANTS |
| 1. |
| Guarantor(s) guarantee to Franchisor and its successors and assigns, for the Term of the |
| Franchise Agreement, that Franchisee will |
| timely pay any amount required by the Franchise Agreement |
| and will perform every undertaking, agreement, and covenant under the Franchise Agreement and any |
| addenda or Exhibits attached to it |
| as each may be amended or renewed. |
| 2. |
| Guarantor(s) also agrees to be personally bound by every term of the Franchise |
| Agreement, as amended or renewed, |
| and agrees to be personally liable for the breach of and cure of every |
| breach of any term, covenant, or condition of the Franchise Agreement. |
| Guarantor(s) agree that this |
| Guaranty is one of payment and performance and not one of just collection. |
| 3. |
| By signing this Guaranty, each Guarantor further agrees that each shall also be subject to |
| all restrictive covenants in the Franchise Agreement, including |
| all covenants of Articles |
| 6, 14, 15, |
| and 16. |
| 4. |
| As part of the inducement given to Franchisor by Guarantor(s), |
| the Guarantor(s) further |
| agree to waive the following, |
| a. |
| acceptance or notice of acceptance; |
| b. |
| notice of demand for payment of any indebtedness or notice of any |
| nonperformance of any obligations; |
| c. |
| protest and notice of default concerning |
| the indebtedness or nonperformance of |
| any obligations guaranteed; |
| d. |
| any right Guarantor may have to require that any action be first brought against |
| Franchisee or any other Person |
| as a condition of liability; and |
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, the Guaranty of Franchisee's Obligations is an agreement where a Guarantor ensures the Franchisee fulfills their obligations under the Franchise Agreement. This includes timely payments and the performance of all agreements and covenants outlined in the Franchise Agreement, including any addenda or exhibits. The Guarantor agrees to be personally bound by the terms of the Franchise Agreement, as well as being personally liable for any breaches of the agreement.
The Guarantor's obligations extend for the entire term of the Franchise Agreement. The guaranty is one of payment and performance, meaning the Franchisor can pursue the Guarantor directly without first attempting to collect from the Franchisee. The Guarantor also agrees to be subject to all restrictive covenants in the Franchise Agreement, including those related to Articles 6, 14, 15, and 16.
As an inducement to Bor Restoration for granting the franchise rights, the Guarantor waives certain rights, including the right to require that action be first brought against the Franchisee before pursuing the Guarantor. This waiver includes acceptance or notice of acceptance, notice of demand for payment, and protest and notice of default. This ensures that Bor Restoration can directly seek recourse from the Guarantor in case of the Franchisee's non-compliance, streamlining the process of enforcing the Franchise Agreement.
In essence, the Guaranty of Franchisee's Obligations serves as a security measure for Bor Restoration, providing an additional layer of assurance that the Franchise Agreement will be upheld. This arrangement is common in franchising, particularly when the franchisee is a corporate entity or has limited operating history, as it mitigates the franchisor's risk by holding an individual personally accountable for the franchise's performance.