For Amorino franchises, is the Guarantor personally liable for breaches of the Franchise Agreement?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
ain documents and provide evidence to our satisfaction that the Business Entity meets certain requirements, as follows:
- (1) You and such Business Entity must execute our then-current standard form of assignment and assumption agreement in which the Business Entity will agree to be bound by, and to assume and discharge your obligations under, this Agreement, and you agree to remain personally liable under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, if a franchisee transfers the franchise to a business entity, the franchisee remains personally liable under the Franchise Agreement. Additionally, if Amorino consents to the transfer, each principal of the business entity, along with their spouse or registered domestic partner, must provide a personal guaranty.
This means that even if the franchise is operated through a separate business entity, Amorino requires that the original franchisee and the principals of the new entity remain personally responsible for fulfilling the obligations of the franchise agreement. This is a common practice in franchising, as it provides the franchisor with additional security and recourse in case of default or breach of contract.
The personal guaranty ensures that Amorino can pursue the personal assets of the guarantors if the business entity fails to meet its financial or contractual obligations. This reduces Amorino's risk and incentivizes the franchisee and its principals to operate the business responsibly and in compliance with the franchise agreement. The requirement for a spousal guaranty further strengthens this security, ensuring that marital assets are also potentially available to satisfy any claims.
It is important for prospective Amorino franchisees to carefully consider the implications of providing a personal guaranty, as it exposes their personal assets to potential liability. Franchisees should seek legal and financial advice before signing any such agreement to fully understand the risks and obligations involved.