What are the obligations of the Developer under the Guaranty and Assumption of Developer's Obligations for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| THIS GUARANTY AND ASSUMPTION OF DEVELOPER'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 ("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 ("Developer") shall punctually pay and perform in full |
| each and every undertaking, agreement and covenant set forth in the Franchise Agreement; |
| 2. |
| Obligations of Guarantor Upon Event of Default. 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; |
| 3. |
| Nature of Guaranty. |
| This Guaranty is an original and independent obligation of |
| Guarantor(s), separate and distinct from Developer's obligations to Franchisor under the Area |
| Development Agreement. The obligations of Guarantor to Franchisor under this Guaranty are direct |
| and primary, regardless of the validity or enforceability of the Franchise Agreement. This Guaranty is |
| for the benefit of Franchisor and is not for the benefit of any third party. This Guaranty shall continue |
| until all obligations of Guarantor to Franchisor under this Guaranty have been performed in full. |
| 4. |
| Guarantor's Authorization to Franchisor. |
| Guarantor(s) authorizes Franchisor, |
| without notice or demand and without lessening Guarantor's liability under this Guaranty, from time |
| to time: (a) to make or approve changes to the Franchise Agreement; (b) to repeatedly compromise, |
| renew, extend, accelerate, or otherwise change the time for payment or other terms of the Franchise |
| Agreement; (c) to take and hold security for the payment of amounts due under the Franchise |
| Agreement or this Guaranty, and exchange, enforce, waive, and release any such security, with or |
| without the substitution of new collateral; (d) to determine how, when, and what application of |
| payments and credits shall be made on amounts due under the Franchise Agreement; and (j) to assign |
| or transfer this Guaranty, in whole or in part. |
| 5. |
| 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 Developer'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) |
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 Developer's Obligations outlines the responsibilities of the guarantor to Buona. The guarantor provides an unconditional and absolute guarantee to Buona that the developer will punctually pay and fully perform every undertaking, agreement, and covenant detailed in the Franchise Agreement. This means the guarantor is on the hook if the developer fails to meet their financial or operational commitments.
In the event of a default by the developer as defined in the Franchise Agreement, the guarantor is obligated to diligently cure the default at their own cost and expense. This could involve injecting capital into the business, rectifying operational deficiencies, or taking other corrective actions to bring the franchise into compliance. The guarantor's obligation is an original and independent one, separate from the developer's obligations under the Area Development Agreement, and remains in effect until all obligations to Buona are fulfilled.
The guarantor also authorizes Buona to make changes to the Franchise Agreement, compromise, renew, extend, or otherwise alter the terms without lessening the guarantor's liability. Buona can also take and hold security for amounts due, determine the application of payments, and assign or transfer the Guaranty. Furthermore, the guarantor makes several representations and warranties to Buona, including that they have not been made any limiting agreements, that the Guaranty is executed at the developer's request, and that they have not misrepresented their assets in a way that would negatively affect their ability to perform their obligations.