Does the B Bops Application Agreement require the applicant to personally guarantee any financing?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
PERSONAL GUARANTY OF OBLIGATIONS UNDER MULTIPLE-UNIT DEVELOPMENT AGREEMENT
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- The undersigned persons hereby represent to B-Bop's Franchising Corp. ("Company") that they are partners or shareholders of the developer ("Developer") entering into the within and foregoing Multiple-Unit Development Agreement (the "Agreement"), of which this Personal Guaranty shall be deemed an integral part.
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- In consideration of the development rights granted to Developer hereunder and in order to induce Company to grant such development rights to Developer, each of the undersigned hereby agrees, jointly, individually and severally, for themselves, their heirs, legal representatives and assigns as follows: (a) that they, and each of them, shall be personally bound by and agree to perform all of the terms, provisions and conditions of this Agreement; (b) that they, and each of them, do hereby personally and unconditionally guarantee full and prompt payment to Company of any indebtedness of Developer arising under or by virtue of this Agreement; (c) that they, and each of them, will not sell, assign or otherwise permit or cause a transfer of the development rights or any partnership or stock interest in Developer without complying with the requirements of Section 13 of the Agreement; (d) that they, and each of them, shall be personally bound by the nondisclosure and noncompete covenants of this Agreement; and (e) that they, and each of them, shall be personally liable for the breach of any provision of this Agreement, including both monetary obligations and any obligation to take or refrain from taking specific actions or activities.
Source: Item 23 — RECEIPTS (FDD pages 53–145)
What This Means (2025 FDD)
According to the 2025 B Bops Franchise Disclosure Document, the Application Agreement itself does not contain a requirement for the applicant to personally guarantee financing. However, the document includes a 'PERSONAL GUARANTY OF OBLIGATIONS UNDER MULTIPLE-UNIT DEVELOPMENT AGREEMENT'. This guaranty applies to developers entering into a Multiple-Unit Development Agreement with B Bops.
The personal guaranty stipulates that the partners or shareholders of the developer are personally bound by the terms, provisions, and conditions of the Multiple-Unit Development Agreement. This includes guaranteeing full and prompt payment of any indebtedness of the developer arising under the agreement. They are also personally bound by the nondisclosure and noncompete covenants within the agreement.
This means that if a franchisee is pursuing a multiple-unit development, they should carefully review the implications of the personal guaranty. They would be held personally liable for the developer's obligations, including financial and non-financial responsibilities, under the Multiple-Unit Development Agreement with B Bops. This is a significant consideration for potential developers as it puts their personal assets at risk.