Does the Burros Fries Individual Guaranty continue if the franchisee declares bankruptcy?

Based on the 2024 Burros Fries Franchise Disclosure Document, the Individual Guaranty signed by the franchisee remains in effect even if the franchisee declares bankruptcy. Specifically, if the franchisee loses lease rights to the site due to bankruptcy, Burros Fries has the option to request the lessor to enter into a new lease with them under the same terms as the original lease.

This clause protects Burros Fries's interest in maintaining the location and continuing operations, regardless of the franchisee's financial status. It also implies that the obligations under the Individual Guaranty, which ensures the franchisee's performance, are not nullified by a bankruptcy filing. The guarantor's responsibilities, therefore, continue even if the franchisee's business faces financial difficulties leading to bankruptcy.

For a prospective Burros Fries franchisee, this means that the personal guarantee is a significant and ongoing commitment. Even if the business encounters severe financial distress and declares bankruptcy, the guarantor remains liable for the obligations outlined in the Franchise Agreement. This highlights the importance of carefully assessing the financial risks and potential liabilities before signing the Franchise Agreement and the Individual Guaranty.