Under the Buona Guaranty, what does the Guarantor warrant to the Franchisor regarding the Developer?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Guarantor has established adequate means of obtaining from Developer, on a continuing basis, information regarding Developer'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 Developer.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Guarantor warrants to Buona that they have established adequate means of obtaining information regarding the Developer's financial condition on a continuing basis. The Guarantor also agrees to stay informed about any facts, events, or circumstances that could affect their risks under the Guaranty.
Absent a request for information from the Guarantor, Buona has no obligation to disclose any information or documents acquired during its relationship with the Developer. This places the onus on the Guarantor to actively monitor the Developer's financial health and any potential risks associated with the guaranty.
This arrangement benefits Buona by ensuring that the Guarantor remains informed and responsible for the Developer's obligations. However, it also carries risk for the Guarantor, who must proactively seek information and assess the Developer's financial stability. A prospective franchisee acting as a guarantor should carefully consider their ability to access and interpret financial information related to the developer to manage their risks effectively.