Who is responsible for the cost and expense of curing a Default under the Franchise Agreement for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- 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;
-
- 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.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a franchisee defaults under the Franchise Agreement, the guarantor(s) of the franchise must cure the default at their sole cost and expense. This obligation is outlined in the Guaranty agreement, which is separate from the Franchise Agreement itself.
The Guaranty agreement specifies that the guarantor's obligation is original and independent, meaning it exists regardless of the validity or enforceability of the Franchise Agreement. This ensures that Buona has a direct claim against the guarantor to rectify any default, without being hindered by potential disputes between Buona and the franchisee.
This arrangement provides Buona with an additional layer of financial security. By requiring a guarantor to cover the costs of curing a default, Buona reduces its financial risk associated with franchisee non-compliance. For a prospective franchisee, this highlights the importance of carefully selecting a guarantor who has the financial capacity and willingness to cover potential default-related expenses. The guarantor should fully understand the obligations they are undertaking, as their financial resources will be at stake if the franchisee fails to meet the terms of the Franchise Agreement.