If 1-800-GOT-JUNK? allows installment payments, are all owners of an entity franchisee required to personally guarantee payment?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
We do not generally offer financing. However, we may, in our sole discretion, allow the initial franchise fee with respect to some of the subterritories to be made in equal monthly installments without interest if payments are timely made. Installment arrangements will be described in Schedule B of the Franchise Agreement. Outstanding amounts may be pre-paid at any time without penalty. Late payments will incur interest from and after their respective due dates until paid in full at the rate of 24% per annum or at such other rate as we may specify in writing from time to time or the maximum rate permitted by law if lower. All owners of an entity franchisee must personally guarantee payment of initial franchise fees made through installment arrangements.
Source: Item 10 — Financing (FDD pages 24–33)
What This Means (2025 FDD)
According to 1-800-GOT-JUNK?'s 2025 Franchise Disclosure Document, if 1-800-GOT-JUNK? allows a franchisee to pay the initial franchise fee in installments, all owners of an entity franchisee must personally guarantee the payments. This means that if the franchisee is a corporation, LLC, or other business entity, each individual who owns a stake in that entity must sign a personal guarantee, promising to be personally liable for the installment payments.
This requirement protects 1-800-GOT-JUNK? by ensuring that there are multiple parties responsible for the debt. If the franchisee entity fails to make payments, 1-800-GOT-JUNK? can pursue any of the owners individually to recover the outstanding amount. This is a common practice in franchising, as it reduces the franchisor's risk when offering financing options.
Franchisees should carefully consider the implications of providing a personal guarantee. It means that their personal assets are at risk if the franchise business fails to meet its financial obligations. Prospective franchisees should consult with a legal and financial advisor to fully understand the risks and obligations associated with signing a personal guarantee before entering into a franchise agreement with 1-800-GOT-JUNK?.