Does compliance with the terms of the Guaranty conflict with any law or statute for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Guarantor's Representations and Warranties.
Guarantor(s) represents and warrants to Franchisor that: (a) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this Guaranty; (b) this Guaranty is executed at Franchisee's request and Franchisor would not execute the Franchise Agreement were it not for the execution and delivery of this Guaranty; (c) Guarantor has not and will not, without the prior written consent of Franchisor, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all, or substantially all, of Guarantor's assets, or any interest therein if any such event would have a material negative effect on Guarantor's ability to perform its obligations under this Guarantor or the Franchise Agreement; (d) neither the execution nor the delivery of this Guaranty, nor compliance with the terms hereof, will conflict with or result in the breach of any law or statute, will constitute a breach or default under any agreement or instrument to which Guarantor may be a party, or will result in the creation or imposition of any charge or lien upon any property or assets of Guarantor; (e) Franchisor has made no representation to Guarantor as to the creditworthiness of Guarantor; and (f) Guarantor has established adequate means of obtaining from Franchisee, on a continuing basis, information regarding Franchisee's financial condition.
Guarantor agrees to keep adequately informed of any facts, events or circumstances which might in any way affect Guarantor's risks under this Guaranty, and Guarantor further agrees that, absent a request for information from Guarantor, Franchisor shall have no obligation to disclose to Guarantor any information or documents acquired by Franchisor in the course of its relationship with Franchisee.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the guarantor represents and warrants to Buona that neither the execution nor the delivery of the Guaranty, nor compliance with its terms, will conflict with or result in the breach of any law or statute. The Guaranty also confirms that it will not constitute a breach or default under any agreement or instrument to which the guarantor may be a party. Additionally, it will not result in the creation or imposition of any charge or lien upon any property or assets of the guarantor.
This clause protects Buona by ensuring that the guarantor's obligations under the Guaranty are legally sound and do not violate any existing laws, statutes, or agreements. It also confirms that the Guaranty does not create any financial encumbrances on the guarantor's assets. This provision is a standard practice in franchising, as it provides assurance to the franchisor that the Guaranty is valid and enforceable.
Furthermore, the guarantor must keep adequately informed of any facts, events, or circumstances that might affect their risks under the Guaranty. However, Buona has no obligation to disclose any information or documents acquired during its relationship with the franchisee to the guarantor, unless the guarantor specifically requests such information. This places the onus on the guarantor to actively monitor the franchisee's financial condition and performance to assess their own risk exposure under the Guaranty.