Are the obligations of the Guarantors in Exhibit C of the Buona Area Development Agreement unconditional?
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, outlined in Exhibit C of the Area Development Agreement, includes an unconditional agreement from the Guarantor(s). Specifically, the Guarantor(s) "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".
This means that the Guarantor(s) are fully responsible for ensuring the Developer meets all financial and operational obligations detailed in the Franchise Agreement. If the Developer fails to meet these obligations, the Guarantor(s) must step in to correct the default, covering all associated costs. This obligation is "an original and independent obligation" of the Guarantor(s), meaning it is separate from the Developer's obligations.
Furthermore, the Guaranty remains in effect regardless of the validity or enforceability of the Franchise Agreement itself. The Guaranty benefits Buona and not any third party, and it continues until all obligations of the Guarantor(s) to Buona are completely fulfilled. The Guarantor(s) also authorize Buona to make changes to the Franchise Agreement without lessening the Guarantor's liability. This includes the ability to compromise, renew, extend, or otherwise alter the terms of the agreement.