Does the Guaranty and Assumption of Franchisee's Obligations for a Buona franchise create a joint and several liability for the guarantors?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| THIS GUARANTY AND ASSUMPTION OF FRANCHISEE'S OBLIGATIONS ("Guaranty") | |
|---|---|
| is made as of, 20, in consideration of, and as an inducement to, the | |
| execution of the Franchise Agreement by Chicago's Original Italian Beef Franchising LLC, an Illinois | |
| limited liability company, and Five Flavors Franchising LLC, an Illinois limited liability company | |
| (collectively "Franchisor"). In consideration thereof, each of the undersigned hereby jointly and severally, | |
| personally and unconditionally agrees as follows: | |
| 1. | Guaranty. Guarantor(s) hereby unconditionally and absolutely warrants and guarantees |
| to Franchisor that ("Franchisee") shall punctually pay and perform in full each and every | |
| undertaking, agreement and covenant set forth in the Franchise Agreement; |
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Guaranty and Assumption of Franchisee's Obligations does create a joint and several liability for the guarantors. The document states that each guarantor jointly and severally, personally and unconditionally agrees to the terms outlined in the guaranty. This means that each guarantor is individually liable for the full amount of the franchisee's obligations, as well as collectively liable with the other guarantors.
This has significant implications for anyone signing the Guaranty. Buona can pursue any one or all of the guarantors for the full amount owed, regardless of the contributions or financial situations of the other guarantors. This is a stronger obligation than a several liability, where each guarantor is only responsible for their proportionate share.
Furthermore, the Guaranty is an "original and independent obligation" of the guarantor, separate from the franchisee's obligations. This means that the guarantor's obligations to Buona are direct and primary, irrespective of the validity or enforceability of the Franchise Agreement itself. The guarantor cannot claim that the Franchise Agreement is invalid as a defense against their obligations under the Guaranty. This arrangement is designed to provide Buona with maximum protection and recourse in case of franchisee default.
Finally, the guarantor authorizes Buona to make changes to the Franchise Agreement, extend payment terms, take and hold security, and assign the Guaranty without notice or demand and without lessening the guarantor's liability. This clause gives Buona considerable flexibility in managing the franchise relationship without needing to seek further consent from the guarantor, while simultaneously ensuring that the guarantor remains fully liable under the Guaranty.