Does the All States M.E.D. Franchise Agreement include a Schedule 3 that contains an Unlimited Guaranty and Assumption of Obligations?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
22.5 Unlimited Guaranty and Assumption of Obligations
All holders of a legal or beneficial interest in Franchisee of five percent (5%) or greater shall be required to execute, as of the date of this Agreement, the Unlimited Guaranty and Assumption of Obligations attached as Schedule 3, through which such holders agree to assume and discharge all of Franchisee's obligations under this Agreement and to be personally liable hereunder for all of the same.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, the Franchise Agreement does include a Schedule 3 titled "Unlimited Guaranty and Assumption of Obligations." This schedule is a standard part of the agreement.
According to section 22.5, all holders of a legal or beneficial interest of 5% or greater in the franchisee must execute Schedule 3. By signing this schedule, these holders agree to assume and fulfill all of the franchisee's obligations under the Franchise Agreement. They also become personally liable for all of the franchisee's obligations.
Schedule 3 ensures that All States M.E.D. has recourse to the personal assets of the franchisee's owners should the franchise business fail to meet its financial or operational obligations. This is a common practice in franchising, as it provides the franchisor with an additional layer of security and encourages diligent management by the franchisee's ownership.