Does the B Bops Franchise Agreement confer rights to any third-party not a party to the agreement?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
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PERSONAL GUARANTY
The undersigned persons hereby represent to B-BOP'S FRANCHISING CORP. ("Company") that they are partners, shareholders or members of the franchisee ("Franchisee") entering into the within and foregoing Franchise Agreement (the "Agreement"), of which this Personal Guaranty shall be deemed an integral part.
In consideration of the Franchise granted to Franchisee hereunder and in order to induce Company to grant such Franchise to Franchisee, 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 or its affiliates of any indebtedness of Franchisee arising under or by virtue of this Agreement or any other agreement between the parties relating to the Franchise granted under this Agreement; (c) that they, and each of them, will not sell, assign or otherwise permit or cause a transfer of the Franchise or any ownership interest in Franchisee without complying with the requirements of this Agreement; (d) that they, and each of them, shall be personally bound by the nondisclosure and noncompete covenants set forth in 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 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to the 2025 B Bops Franchise Disclosure Document, the Franchise Agreement does address third-party rights through a personal guaranty. Specifically, if the franchisee is a partnership, corporation, or limited liability company, the partners, shareholders, or members must sign a personal guaranty. This guaranty makes them personally bound by the Franchise Agreement, guaranteeing the franchisee's debts and obligations to B Bops.
This means that individuals who own the franchisee entity are personally responsible for ensuring the B Bops franchise complies with the agreement. They are guaranteeing that the franchisee will meet its financial obligations to B Bops and will adhere to all terms and conditions of the Franchise Agreement. This includes non-disclosure and non-compete covenants.
The personal guaranty ensures that B Bops has recourse to the personal assets of the owners if the franchise fails to meet its obligations. This is a common practice in franchising, as it provides the franchisor with an additional layer of security and encourages the franchisee's owners to actively manage and oversee the business.
A prospective B Bops franchisee should carefully review the personal guaranty and understand the full extent of their personal obligations before signing the Franchise Agreement. They should also seek legal counsel to fully understand the implications of the guaranty.