Under the Buona Guaranty, is the Guarantor's obligation dependent on the validity or enforceability of the Franchise Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 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.
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.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Guarantor's obligations under the Guaranty are independent of the validity or enforceability of the Franchise Agreement. This means that even if the Franchise Agreement is found to be invalid or unenforceable for any reason, the Guarantor's obligations to Buona under the Guaranty remain in full effect.
This provision protects Buona by ensuring that the Guarantor remains liable for the franchisee's obligations, regardless of any issues that may arise with the Franchise Agreement itself. It also clarifies that the Guaranty is for the sole benefit of Buona and not for any third party.
For a prospective Buona franchisee, this highlights the importance of the Guarantor fully understanding the obligations they are undertaking. The Guarantor cannot rely on potential defects in the Franchise Agreement as a defense against their obligations under the Guaranty. They are directly and primarily responsible for ensuring the franchisee's obligations are met, irrespective of the Franchise Agreement's status.