If the Burger King franchisee fails to make a payment, what obligation does the guarantor have?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Your direct and immediate liability under this Guaranty will be joint and several with FRANCHISEE and each other GUARANTOR of FRANCHISEE (whether such guaranties are entered into prior to or after the date hereof);
(b) The death or incapacity of any GUARANTOR will not modify, amend or terminate this Guaranty, and upon such a death, the estate of such GUARANTOR shall be bound by this Guaranty;
(c) If you should die, become incapacitated, become insolvent or make a general assignment for the benefit of creditors, or if a proceeding under the United States Bankruptcy Code or any similar law affecting the rights of creditors generally shall be filed or commenced by, against or in respect of you or any other GUARANTOR hereunder, any and all obligations of the GUARANTOR shall, at BKC's option, immediately become due and payable without notice;
(d) If any payment or transfer to BKC which has been credited against any Obligation is voided or rescinded or required to be returned by BKC, whether or not in connection with any event or proceeding described in Section 4(c), this Guaranty will continue in effect or be reinstated as though such payment, transfer or recovery had not been made;
(e) You will render any payment or performance required under the Franchise Agreement or any other BKC Agreement upon demand if FRANCHISEE fails or refuses punctually to do so;
(f) Your liability hereunder will be construed as an absolute, unconditional, continuing and unlimited obligation without regard to the regularity, validity or enforceability of any of the Obligations, and without regard to whether any Obligation is limited, modified, voided, released or discharged in any proceeding under the United States Bankruptcy Code or any similar law affecting the rights of creditors generally, or any subsequent reorganization, merger, or consolidation of FRANCHISEE, or any other change in its composition, nature, personnel, or location;
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, a guarantor's obligations are extensive if the franchisee fails to make payments or fulfill other requirements under the franchise agreement or related agreements. The guarantor's liability is joint and several with the franchisee and any other guarantors, meaning Burger King can pursue any or all of them for the full amount owed. This obligation is absolute, unconditional, continuing, and unlimited, regardless of the validity or enforceability of the franchisee's obligations.
Even the death or incapacity of a guarantor does not terminate the guaranty; the guarantor's estate remains bound by it. If a guarantor becomes insolvent or enters bankruptcy proceedings, all obligations become immediately due and payable at Burger King's option, without notice. Furthermore, if any payment made by the franchisee is later voided or rescinded, the guaranty remains in effect as if that payment had never been made.
The guarantor must make any payment or performance required under the Franchise Agreement or any other BKC Agreement if the franchisee fails or refuses to do so punctually. This ensures that Burger King has recourse to ensure all financial and operational obligations are met, even if the franchisee is unable or unwilling to meet them. This protects Burger King's interests and maintains the stability of the franchise system.
Prospective Burger King franchisees should carefully consider the implications of the guaranty and ensure that any potential guarantors fully understand the extent of their obligations. Given the breadth of the guarantor's responsibilities, it is advisable to seek legal counsel to fully understand the risks involved before signing any guaranty agreement.