Under the Brightstar Care personal guarantee, what happens to any franchisee indebtedness to the guarantor?
Brightstar_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the undersigned consents and agrees that: (1) his or her direct and immediate liability under this Guaranty will be joint and several, both with Franchisee and among other guarantors; (2) he or she will render any payment or performance required under the Agreement upon demand if Franchisee fails or refuses punctually to do so; (3) this liability will not be contingent or conditioned upon Franchisor's pursuit of any remedies against Franchisee or another person; (4) this liability will not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence Franchisor may from time to time grant to Franchisee or to another person, including, without limitation, the acceptance of any partial payment or performance or the compromise or release of any claims (including, without limitation, any release of other guarantors), none of which will in any way modify or amend this Guaranty, which will continue and be irrevocable during the term of the Agreement (including, without limitation, any extensions of its term) and afterward for so long as any performance is or might be owed under the Agreement by Franchisee or any of its owners and for so long as Franchisor has any cause of action against Franchisee or any of its owners; (5) this Guaranty will continue in full force and effect for (and as to) any extension or modification of the Agreement and despite the transfer of any interest in the Agreement or Franchisee, and each of the undersigned waives notice of any and all renewals, extensions, modifications, amendments, or transfers; and (6) any Franchisee indebtedness to the undersigned, for whatever reason, whether currently existing or hereafter arising, will at all times be inferior and subordinate to any indebtedness owed by Franchisee to Franchisor or its affiliates.
Each of the undersigned waives: (i) all rights to payments and claims for reimbursement or subrogation which the undersigned may have against Franchisee arising as a result of the undersigned's execution of and performance under this Guaranty; (ii) acceptance and notice of acceptance by Franchisor of his or her undertakings under this Guaranty, notice of demand for payment of any indebtedness or non-performance of any obligations hereby guaranteed, protest
Source: Item 22 — CONTRACTS (FDD pages 117–118)
What This Means (2025 FDD)
According to Brightstar Care's 2025 Franchise Disclosure Document, any debt the franchisee owes to the guarantor is subordinate to the franchisee's debt to Brightstar Care or its affiliates. This means that if the franchisee owes money to both Brightstar Care and the guarantor (who is often a principal of the franchisee entity), Brightstar Care will have priority in recovering its debt. The guarantor's claim will be considered inferior.
This subordination clause is a standard protection for franchisors. It ensures that the franchisor's financial interests are prioritized over those of the franchisee's owners or related parties. This is particularly important in cases of franchisee default or bankruptcy, where assets may be limited. By ensuring its claims are superior, Brightstar Care reduces its risk of financial loss.
For a prospective Brightstar Care franchisee, this means that any loans or financial support received from the guarantor will be secondary to the financial obligations to Brightstar Care. The guarantor also waives rights to payments and claims for reimbursement or subrogation against the franchisee that arise from the guarantor's execution of and performance under the Guaranty. This should be carefully considered when structuring the financing for the franchise, as it could impact the guarantor's ability to recover funds loaned to the franchisee in case of financial difficulties.