Can Buns On Fire pursue a guarantor directly if the franchisee defaults?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
Should Franchisee be in breach or default under the Franchise Agreement or any other agreement(s) by and between Franchisee and Franchisor, Franchisor may proceed directly against any or each of the undersigned without first proceeding against Franchisee and without proceeding against or naming in such suit any other Franchisee, signatory to the Franchise Agreement or any others of the undersigned. The undersigned agree to bear any and all Franchisor's costs of collection hereunder, including all court costs and expenses, attorneys' fees, costs of or resulting from delays; travel, food, lodging and other living expenses necessitated by the need or desire to appear before courts or tribunals (including arbitration tribunals), and all other costs of collection.
Notice to or demand upon Franchisee or any of the undersigned shall be deemed notice to or demand upon Franchisee and all of the undersigned, and no notice or demand need be made to or upon any
or all of the undersigned. The cessation of or release from liability of Franchisee or any of the undersigned shall not relieve any other Guarantors from liability hereunder, under the Franchise Agreement, or under any other agreement(s) between Franchisor and Franchisee, except to the extent that the breach or default has been remedied or moneys owed have been paid.
Any waiver, extension of time or other indulgence granted by Franchisor or its agents, successors or assigns, with respect to the Franchise Agreement or any other agreement(s) by and between Franchisee and Franchisor, shall in no way modify or amend this Guaranty, which shall be continuing, absolute, unconditional and irrevocable.
It is understood and agreed by the undersigned that the provisions, covenants and conditions of this Guaranty shall inure to the benefit of the Franchisor, its successors and assigns. This Guaranty may be assigned by Franchisor voluntarily or by operation of law without reducing or modifying the liability of the undersigned hereunder.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, Buns On Fire has the right to pursue a guarantor directly if the franchisee defaults on the Franchise Agreement or any other agreement between the franchisee and Buns On Fire. Buns On Fire can proceed against any or all guarantors without first pursuing action against the franchisee.
This means that if a franchisee fails to meet their financial or contractual obligations, Buns On Fire can immediately seek recourse from the guarantor, who has agreed to be responsible for the franchisee's debts and obligations. This clause protects Buns On Fire by providing an alternative avenue for recovering losses in case of franchisee default. The guarantor also agrees to cover all of Buns On Fire's collection costs, including court costs, attorney's fees, and other related expenses.
The guarantor's obligations remain even if the franchisee is released from liability, unless the default is resolved or the money owed is paid. Any leniency, such as a waiver or extension of time, granted by Buns On Fire to the franchisee does not affect the guarantor's obligations, which remain absolute and unconditional. This ensures that the guaranty remains in full effect regardless of any modifications to the agreement between Buns On Fire and the franchisee.
The guaranty benefits Buns On Fire, its successors, and assigns, and Buns On Fire can assign the guaranty without affecting the guarantor's liability. This provision ensures that Buns On Fire retains its rights under the guaranty even if the franchise changes ownership or is transferred. The guarantor waives the right to receive notice or demand, meaning Buns On Fire does not need to notify the guarantor before taking action against them.