Does Buildingstars' non-exercise of a right under the Promissory Note affect the guarantee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
The obligations of GUARANTOR are direct and may be enforced immediately without FRANCHISOR being required to resort to any other right, remedy or security and this Guarantee shall be enforceable immediately against GUARANTOR, without the necessity for any suit or proceedings on FRANCHISOR'S part of any kind or nature whatsoever against FRANCHISEE, and without the necessity of any notice of non-payment, non-performance or non-observance or the continuance of any such default or of any notice of acceptance of this Guarantee or of FRANCHISOR'S intention to act in reliance herein or of any other notice or demand to which GUARANTOR might otherwise be entitled, all of which GUARANTOR hereby expressly waives.
Source: Item 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the guarantee provided by the guarantor remains in effect regardless of whether Buildingstars exercises its rights or remedies. The guarantor's obligations are direct and can be enforced immediately without Buildingstars needing to pursue any other recourse against the franchisee.
Specifically, the guarantor waives any requirement for Buildingstars to provide notice of non-payment, non-performance, or continued default. The guarantor also waives notice of acceptance of the guarantee or Buildingstars' intention to rely on it. This means Buildingstars can pursue the guarantor directly without first exhausting other options or providing specific notifications.
This arrangement benefits Buildingstars by providing a straightforward path to recover owed amounts in case of franchisee default. For a prospective Buildingstars franchisee, it's crucial to understand the implications for any individual acting as a guarantor, as their assets could be at risk if the franchisee fails to meet their financial obligations under the Promissory Note. The guarantor should be fully aware of the scope of the guarantee and the potential for immediate enforcement by Buildingstars.