Does the Buildingstars Promissory Note Guarantee cover changes to the Franchisee's liability resulting from bankruptcy law?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
The validity of this Guarantee and the obligations of GUARANTOR hereunder shall in no manner be terminated, affected, or impaired by reason of the assertion or the failure to assert by FRANCHISOR against FRANCHISEE, any of the rights or remedies reserved to FRANCHISOR pursuant to the provisions of the Promissory Note.
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 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the Promissory Note Guarantee is designed to remain in effect even if the franchisee's liabilities are altered due to bankruptcy proceedings. The guarantee's validity is not terminated or impaired if Buildingstars asserts or fails to assert its rights against the franchisee under the Promissory Note.
The guarantee is described as absolute, unconditional, and irrevocable, regardless of various circumstances. These circumstances include modifications or extensions to the Promissory Note or Franchise Agreement, Buildingstars's actions or inactions regarding its rights, and any bankruptcy, insolvency, or similar proceedings involving the franchisee.
Specifically, the guarantee covers any changes to the franchisee's liability or obligations under the Promissory Note resulting from bankruptcy laws, including disaffirmation or abandonment by a trustee. This protection extends to 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.