In the Buona Guaranty, what information about the franchisee must the guarantor provide?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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 must establish adequate means of obtaining information from the franchisee regarding the franchisee's financial condition on a continuing basis. The guarantor also agrees to stay informed of any facts, events, or circumstances that could affect the guarantor's risks under the guaranty.
This means that if you are acting as a guarantor for a Buona franchisee, you are expected to actively monitor the franchisee's financial health and any other factors that could impact their ability to meet their obligations. This could involve regularly requesting and reviewing financial statements, tracking key performance indicators, and staying informed about any significant events affecting the business.
It is important to note that Buona has no obligation to proactively disclose any information about the franchisee's performance to the guarantor unless the guarantor specifically requests it. Therefore, the onus is on the guarantor to take the initiative in gathering the necessary information to assess their risk. This requirement ensures that the guarantor is fully aware of the potential liabilities they are undertaking and can make informed decisions about their involvement.
This is a standard practice in franchising, as guarantors play a crucial role in mitigating the franchisor's risk. By requiring the guarantor to stay informed, Buona aims to ensure that the guarantor is prepared to step in and fulfill the franchisee's obligations if necessary, thereby protecting the overall stability of the franchise system.