What is the current form of the personal guarantee that Alloy requires?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Schedule D to the Franchise Agreement
PERSONAL GUARANTEE AND AGREEMENT TO BE BOUND PERSONALLY BY THE TERMS AND CONDITIONS OF THE FRANCHISE AGREEMENT
In consideration of the execution of the Franchise Agreement by us, and for other good and valuable consideration, the undersigned, for themselves, their heirs, successors, and assigns, do jointly, individually and severally hereby become surety and guarantor for the payment of all amounts and the performance of the covenants, terms and conditions in the Franchise Agreement, to be paid, kept and performed by the franchisee, including without limitation the arbitration and other dispute resolution provisions of the Agreement.
Further, the undersigned, individually and jointly, hereby agree to be personally bound by each and every condition and term contained in the Franchise Agreement, including but not limited to the noncompete provisions in subparagraph 10.D, and agree that this Personal Guarantee will be construed as though the undersigned and each of them executed a Franchise Agreement containing the identical terms and conditions of this Franchise Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 49–50)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees must sign a personal guarantee. This guarantee means that the franchisee agrees to be personally responsible for the financial obligations and performance requirements outlined in the Franchise Agreement. Specifically, the franchisee acts as a surety and guarantor for the payment of all amounts and the fulfillment of all terms and conditions within the Franchise Agreement. This includes, but is not limited to, adhering to arbitration and dispute resolution processes.
Furthermore, the personal guarantee extends to the franchisee being individually bound by every term and condition of the Franchise Agreement. A notable example provided in the FDD is the non-compete clause, indicating that the franchisee's personal obligations mirror those as if they had directly executed the Franchise Agreement themselves. This ensures that Alloy can seek recourse directly from the franchisee's personal assets if the franchised business fails to meet its obligations.
In practical terms, this means that a prospective Alloy franchisee should carefully review the Franchise Agreement, understanding that their personal assets are at risk should the business default on its financial or operational commitments. The personal guarantee is a standard practice in franchising, designed to ensure the franchisee is fully committed to the success and proper operation of the business, and to protect the franchisor's brand and investment. Franchisees should seek legal counsel to fully understand the implications of signing such a guarantee.