Can Corner Bakery Cafe waive the cross-guarantee requirement?
Corner_Bakery_Cafe Franchise · 2025 FDDAnswer from 2025 FDD Document
- 13.5.2 Cross-Guarantee. If you, any Principal, guarantor or any parent, subsidiary or affiliate of yours holds any interest in other restaurants that are franchised by BCF or our affiliates, the party who owns that interest shall sign, concurrently with this Agreement, a form of cross-guarantee to BCF and our affiliates for the payment of all obligations for such restaurants, unless waived in writing by us in our sole discretion. For purposes of this Agreement, an affiliate of yours is any company controlled, directly or indirectly, by you or your parent or subsidiary.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to the 2025 Corner Bakery Cafe Franchise Disclosure Document, Corner Bakery Cafe has the discretion to waive the cross-guarantee requirement in writing. The cross-guarantee applies if a franchisee, any principal, guarantor, or any parent, subsidiary, or affiliate of theirs holds an interest in other restaurants franchised by Corner Bakery Cafe or its affiliates. In such cases, the party owning that interest must sign a cross-guarantee to Corner Bakery Cafe and its affiliates, ensuring the payment of all obligations for those restaurants.
This means that if a prospective Corner Bakery Cafe franchisee or their related entities are involved in other Corner Bakery Cafe franchises, they would typically be required to guarantee the financial obligations of all those franchises. However, Corner Bakery Cafe retains the right to waive this requirement, providing some flexibility in specific circumstances.
For a potential franchisee, this waiver option could be significant. If they already have multiple Corner Bakery Cafe locations or investments in other locations, the cross-guarantee could represent a substantial financial risk. The ability to obtain a written waiver from Corner Bakery Cafe could mitigate this risk, making the franchise opportunity more attractive. It is important to note that the decision to grant a waiver is at Corner Bakery Cafe's sole discretion, so a franchisee should not assume a waiver will be granted.