If a default occurs, is the Guarantor required to cure the default for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Should a Default (as defined in the Franchise Agreement) occur, Guarantor(s) shall diligently proceed to cure such Default at Guarantor's sole cost and expense;
-
- Nature of Guaranty.
This Guaranty is an original and independent obligation of Guarantor(s), separate and distinct from Franchisee's obligations to Franchisor under the Franchise Agreement.
The obligations of Guarantor to Franchisor under this Guaranty are direct and primary, regardless of the validity or enforceability of the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a default occurs, the Guarantor is required to cure the default. Specifically, the FDD states that should a default occur as defined in the Franchise Agreement, the Guarantor(s) must diligently proceed to cure such default at the Guarantor's sole cost and expense.
This obligation is further clarified by stating that the Guaranty is an original and independent obligation of the Guarantor(s), separate and distinct from the Franchisee's obligations to Buona under the Franchise Agreement. This means the Guarantor's responsibility to cure defaults is direct and primary, regardless of the validity or enforceability of the Franchise Agreement itself.
This requirement protects Buona by ensuring that there is a party responsible for correcting any failures in the franchise operation, even if the franchisee is unable or unwilling to do so. For a prospective franchisee, this highlights the importance of understanding the obligations of any guarantor involved in their franchise agreement, as they will be held accountable for curing defaults.