Does Buildingstars waive the guarantor's rights to payments and claims for reimbursement against the franchisee arising from the guarantor's performance under the guaranty?
Buildingstars Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
- (1) acceptance and notice of acceptance by BUILDINGSTARS or Affiliates of the foregoing undertakings;
- (2) notice of demand for payment of any indebtedness or nonperformance of any obligations hereby guaranteed;
- (3) protest and notice of default to any party with respect to the indebtedness or nonperformance of any obligations hereby guaranteed;
- (4) any right he or she may have to require that an action be brought against FRANCHISEE or any other person as a condition of liability;
- (5) all rights to payments and claims for reimbursement or subrogation which any of the GUARANTORS may have against the FRANCHISEE arising as a result of the GUARANTORS' execution of and performance under this guaranty; and
- (6) any and all other notices and legal or equitable defenses to which he or she may be entitled.
Source: Item 22 — CONTRACTS (FDD page 43)
What This Means (2025 FDD)
According to Buildingstars's 2025 Franchise Disclosure Document, the guarantor's rights to payments and claims for reimbursement from the franchisee are waived. Specifically, the guarantor gives up "all rights to payments and claims for reimbursement or subrogation which any of the GUARANTORS may have against the FRANCHISEE arising as a result of the GUARANTORS' execution of and performance under this guaranty".
This waiver means that if the guarantor makes any payments or incurs any expenses on behalf of the Buildingstars franchisee under the guaranty, the guarantor cannot seek reimbursement from the franchisee. This is a significant point for potential guarantors, as they are essentially giving up any recourse against the franchisee for amounts paid under the guaranty.
This provision protects Buildingstars by ensuring that the guarantor's obligations are clear and that there are no potential disputes between the guarantor and the franchisee regarding reimbursement. It also simplifies the process for Buildingstars in the event of a franchisee default, as they only need to deal with the guarantor, who has no remaining claims against the franchisee.
Prospective guarantors should carefully consider this waiver and understand the potential financial implications before signing the guaranty agreement. They should be prepared to potentially bear the full cost of the franchisee's obligations without any expectation of reimbursement.