Does the Amorino Guaranty continue if any interest in the Amorino franchise is transferred?
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.
- (2) The Business Entity must be newly formed and articles or certificate of incorporation, formation or organization, bylaws, operating agreement or other organizational documents (collectively, the "Organizational Documents") must state that its activities are limited exclusively to the ownership and operation of the Franchised Business.
- (3) You must own and control 100% of the equity interest of the Business Entity, and no interest may be transferred without our prior written consent.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, if an individual franchisee transfers their interest to a business entity for operational convenience, the original franchisee remains personally liable under the franchise agreement. This means that even after the transfer, the individual who initially signed the agreement continues to be responsible for fulfilling the obligations outlined in it.
If Amorino consents to any transfer of interest, each principal of the business entity, along with their spouse or registered domestic partner, must provide a personal guaranty in Amorino's current form. This ensures that Amorino has recourse against multiple parties should the business entity fail to meet its obligations. The requirement for a new guaranty from the transferee's principals suggests that the original guaranty may not automatically continue, and Amorino seeks additional security with the new ownership structure.
In the event of a transfer, the transferee must execute Amorino's current form of franchise agreement, which may have materially different terms than the original agreement, including potentially different royalty fees and advertising obligations. The term of the new agreement will be the remaining term of the original agreement at the time of transfer, without any renewal rights. This condition highlights that a transfer is not simply an assumption of the existing agreement but a potentially new contractual relationship with Amorino under revised terms.