Does a trustee's disaffirmation of the Promissory Note for a Buildingstars franchisee affect the guarantee?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
d under the Franchise Agreement. Notwithstanding anything herein to the contrary, any assignment or sale described in paragraphs A, B, and C, will not be considered a default under the Franchise Agreement so long as the said assignment or sale is made in compliance with the terms of the Franchise Agreement. | ___________________________
* Terms if this note is to finance the Initial Franchise Fee ** Terms if this note is to finance the Account Sales Fee
PROMISSORY NOTE GUARANTEE
As an inducement to BUILDINGSTARS MANAGEMENT, INC. ("FRANCHISOR"), to defer payment of fees pursuant to the Franchise Agreement which ___________________________________ ("FRANCHISEE") owes in accordance with the terms of the Promissory Note of even date herewith to which this Guarantee is attached, each of the undersigned ("GUARANTOR"), hereby guarantees the performance of all obligations of FRANCHISEE and agree to timely perform and observe all the terms, covenants and conditions to be performed by FRANCHISEE under the Promissory Note.
This Guarantee is given as a condition of and in consideration of FRANCHISOR deferring payment of certain amounts due to FRANCHISOR, which amounts are evidenced by the foregoing promissory note.
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 a guarantor is a direct obligation. The guarantor agrees to ensure the franchisee fulfills all obligations under the Promissory Note. This guarantee is a condition for Buildingstars deferring payment of certain fees.
The document specifies that Buildingstars can immediately enforce the guarantee without needing to pursue any other rights, remedies, or security. This means Buildingstars is not required to first attempt to recover from the franchisee before seeking fulfillment from the guarantor. The guarantor also waives any requirement of notice regarding non-payment or non-performance by the franchisee.
Therefore, if a trustee disaffirms the Promissory Note, the guarantor's obligations remain in place. Buildingstars can still seek recourse directly from the guarantor without needing to take action against the franchisee or providing any specific notices. This arrangement provides Buildingstars with a direct and immediate avenue for recovering owed amounts, regardless of the franchisee's financial situation or any legal proceedings involving the franchisee's debt.