Does the Guarantor assign to Buona all claims they may have against the Developer in the event of insolvency?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor does hereby assign to Franchisor all claims which they may have or acquire against Developer or against any assignee or trustee in bankruptcy of Developer; provided however, that such assignment shall be effective only for the purpose of assuring to Franchisor full payment of all amounts due under the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Guarantor assigns to Buona all claims they may have against the Developer in the event of insolvency. This assignment ensures that Buona receives full payment of all amounts due under the Franchise Agreement.
Specifically, the Guarantor assigns all claims they may have or acquire against the Developer, including claims against any assignee or trustee in bankruptcy of the Developer. However, this assignment is only effective to the extent necessary to ensure Buona receives full payment of all amounts owed under the Franchise Agreement.
This provision protects Buona's financial interests in the event of the Developer's insolvency. By securing the Guarantor's claims against the Developer, Buona strengthens its position to recover outstanding debts. Prospective franchisees should understand the implications of this clause, especially if they are acting as a guarantor for another party, as it could impact their financial obligations and rights in the event of the Developer's financial distress.