Is the Buildingstars Promissory Note Guarantee considered absolute and unconditional?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
This Guarantee shall be absolute, unconditional and irrevocable.
This Guarantee shall be a continuing Guarantee, and (whether or not GUARANTOR shall have notice or knowledge of any of the following), the liability and obligations of GUARANTOR hereunder shall be absolute and unconditional irrespective of:
- (a) any modification of, or supplement to, or extension or renewal of the Promissory Note, the Franchise Agreement, or any assignment, sale, or transfer thereof;
- (b) any exercise or non-exercise of any right, power, remedy or privilege under or in respect of the Promissory Note or this Guarantee or any waiver, consent or approval by FRANCHISOR with respect to any of the covenants, terms, conditions or agreements contained in the Promissory Note or any indulgences, forbearance or extensions of time for performance or observance allowed to FRANCHISEE from time to time, at any time and for any length of time;
- (c) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition or liquidation or similar proceedings relating to FRANCHISEE, or its properties or creditors;
- (d) any impairment, modification, change, release or limitation of liability or obligation of FRANCHISEE under the Promissory Note (including, but not limited to, any disaffirmation or abandonment by a trustee of FRANCHISEE), resulting from the operation of any present or future provision of the Bankruptcy Abuse Prevention and Consumer Protection Reform Act of 2005 or any other similar federal or state statute, or from the decisions of any court; or
Source: Item 23 — RECEIPT (FDD pages 43–217)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the Promissory Note Guarantee is indeed considered absolute, unconditional, and irrevocable. This guarantee is a condition for Buildingstars to defer payment of fees that the franchisee owes under the Promissory Note.
This means that as a guarantor, you are directly and immediately responsible for the franchisee's obligations without Buildingstars needing to pursue any other remedies or securities. You waive any rights to notices of non-payment or non-performance. The guarantee remains valid regardless of any changes to the Promissory Note or Franchise Agreement, exercises or non-exercises of rights, bankruptcy proceedings of the franchisee, or any modifications to the franchisee's obligations due to laws or court decisions.
For a prospective Buildingstars franchisee, this has significant implications if they require a guarantor for their Promissory Note. The guarantor's obligations are comprehensive and not easily discharged. It is crucial for any potential guarantor to fully understand the scope of this commitment and the potential financial risks involved, as the guarantee remains in effect even under unforeseen circumstances such as bankruptcy or modifications to the original agreement.