Under the Amorino franchise agreement, what constitutes a breach of the agreement regarding the guaranty?
Amorino Franchise · 2025 FDDAnswer from 2025 FDD Document
of such agreement shall be the remaining term of this Agreement at the time of transfer, without any rights of renewal.
- (7) If the transferee is a Business Entity, then each of the transferee's Principals and their spouse or registered domestic partner shall have delivered to us a guaranty in our then-current standard form of guaranty.
Source: Item 22 — CONTRACTS (FDD pages 80–81)
What This Means (2025 FDD)
According to Amorino's 2025 Franchise Disclosure Document, a breach related to the guaranty primarily arises in the context of transferring ownership to a business entity. If a franchisee transfers the Amorino franchise to a business entity, each principal of that entity, along with their spouse or registered domestic partner, must provide a personal guaranty in Amorino's current standard form. Failure to provide this guaranty constitutes a breach of the franchise agreement.
This requirement ensures that Amorino has recourse to the personal assets of the individuals controlling the business entity, providing an additional layer of security for Amorino. This is a common practice in franchising, as it protects the franchisor from potential losses if the business entity fails to meet its financial obligations. The personal guaranty holds the principals of the business entity directly accountable for the franchise's performance.
Additionally, any transfer of the franchise without Amorino's prior written consent is considered a material breach of the agreement, regardless of whether it involves a guaranty. This includes transfers by operation of law. This provision gives Amorino significant control over who operates an Amorino franchise, ensuring that all franchisees meet their standards and obligations. The requirement for a personal guaranty is a key component of maintaining the integrity and financial stability of the Amorino franchise system.